Question: My husband is planning to start a two-year Master’s degree program next fall (2008) which will cost about 24,000 total. We have enough money in savings to pay for most of the tuition, but I wonder whether it would be wiser to take out student loans for all of it and let our cash stay in the bank to earn interest for those two years. (We have no other debt other than a mortgage.) Suzan, Minneapolis, MN

Answer: To some extent this is a personal choice or preference. Some people in your financial circumstances just don’t want to take on any debt. They prefer to pay out of savings. Clearly, that’s a sound option.

But I’d like to argue for borrowing some to most of the money needed for the Master’s program while leaving your savings alone. The reason is that when your husband graduates you could face a number of different choices, including moving to another city for a better job. Now, that may or may not be in the cards, but by keeping your savings your decision about what to do won’t be constrainted by money when he graduates. And since there is no prepayment penalty with student loans, you can always pay off the debt at that time.