Princeton MFin Princeton Cost of Attendance Analysis

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Per Andy's suggestion, I've done some rough back-of-the-envelope calculations on the cost of attendance:

  • Tution and Fees: $40,500 2012-2013
    • Includes a weak student health insurance. If you have health issues, you may want to do a COBRA instead.
  • Disability insurance: (STRONGLY RECOMMENDED) $500/year for a $40K/year after-tax supplemental policy.
  • Basic Living expenses: $2200/month, $26400
    • Rent: $900/month if you share a roommate in on-campus apartments.
    • Food: $20/day= $610/month? (estimated from Jersey City)
    • Books: $1000/semester
    • Utilities: $50/month (not including cable and internet)
    • Beer and fun: $50/week= $220/month
    • Clothing: $300/semester
    • Travel allowance to visit family: $840/year
    • Add: 10% error margin
  • Optional Expenses:
    • Car: $4500/year (cash), $6500/year (cash plus depreciation and opportunity cost)
      • Insurance: $600/six months (Progressive.com quote on 2007 Mustang with $50K/100K coverage and $1000 comprehensive/collision deductibles.)
      • Maintenance: $600/year
      • Registration and inspections: $90/year
      • Parking: might be included for graduate students living on campus.
      • Gasoline @ 24 mpg, 600 miles per month: $90/month
      • Non-cash depreciation (straightline assuming a 5-year vehicle life on a Ford Mustang): $1600/year
      • Non-cash foregone investment opportunity at 5%/year inflation-adjusted: $400/year
A few notes on potential tax savings:
  • You can withdraw from your IRA penalty-free prior to age 59.5 to pay for tuition under the education exception. The IRS also allows penalty-free IRA withdrawals to cover room and board, up to Princeton's cost of attendance estimate (tuition plus ~$18K last year)
  • In addition, if you plan on returning to work in one year and the degree does not "qualify you for a new degree or business", you can also take a business tax deduction on the majority of the tuition expenses. I would assume that if you already work for a bank, hedge fund, or other finance-related company in a position that relies somewhat on your financial knowledge, you would be allowed to take this deduction if you are doing the one year program. Business tax deductions are subject to a 2% of AGI floor. For instance, if you plan on earning $50K this year and withdrawing $40.5K from your 401k to pay for school, you can only deduct $40.5K-2%*(40.5K+50K)=38,690 for the $40,500 tuition payment. You also have to forgo a standard deduction, but for most purposes, the vast majority of your tuition payment is deductible.
  • For a two-year admit, it is still generally tax advantageous to withdraw from a pre-tax IRA during the year 2013. Assuming $15K of income in 2013 from an internship, you have an additional $27K worth of withdrawals that would occur in the 15% tax bracket, producing a tax savings of $3500 over contributions in the 28% tax bracket prior to the Lifetime Learning Credit. Again, these withdrawals appear to occur penalty-free up to Princeton's cost of attendance estimate.
 
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