Should I use my savings or take private student loans to fund my degree?

Few people have enough money in savings accounts to pay for their international master's tuition outright.
The majority of international grad students have some savings and should continue reading – even if you don’t have enough savings to pay for university.
The question may become relevant while preparing your international grad school finances – or while you’re in the repayment cycle.

 Is it smarter to use savings or a private student loan?

The question of taking private student loans or using savings to pay for your masters degree resembles a much more common question:

Should I use savings to pay for credit card debt?
If you put some numbers to this question, it becomes easier to understand how similar these questions are.

If you calculate your options based just on the numbers, your best choice is obvious.
But, the world isn’t just numbers.
There’s a reason for savings accounts; you want a secure home in a safe neighbourhood, or you want a buffer in case you lose your job. There are countless reasons and motivations.
This isn’t a black or white question with a choice of two answers. There is plenty of grey in the middle; you don’t need to use all of your savings to pay off all of your debt.
Throwing $5000 from the savings account towards the credit card would reduce the interest (at a theoretical 18%) down to $180, and while would only be earning $20 on the savings account, you’d be saving $800 a month.
These equations are never that smooth. There are complexities and accumulated interest, and maybe you need to dip into that $1000 because you need to replace the brakes on your car.

Priorities determine use of savings or international student loans

We can’t tell you, even in this hypothetical situation whether you should put $4000, $4500, or $5000 towards debt. We won’t even tell you whether you should put any of your hypothetical savings towards debt.
Maybe you need that money in the bank because job security isn’t the best at the moment. Maybe a family member is ill.
Whether you would keep your savings or pay off your debt is totally up to you. It’s entirely possible that you won’t sleep well without a large cushion in the bank. Or, maybe, the debt is keeping you awake at night.
The point is that it all boils down to your priorities and the actual figures you have in front of you.
So let’s take it back to a realistic savings versus international student loans question.

Useful questions for savings vs loan decisions

There are dozens of queries that can help you with these decisions, but you should probably start with these.

Is there job security in your field?

If there is high and rising demand for the skills you’ll have after graduation, you can really spend some time thinking through the international student loan versus savings question.
If you’re almost certain that you’ll find a fantastic job and do so quickly, you may want to hold onto as much of your cushion as you can until you do so.