Ah, the traditional pleasures of September. Summer's heat starts to fade. Pumpkin-spice-flavored everything begins to appear on menus. People get in their first complaints of the year at seeing retailers roll out the Christmas marketing before they've even picked out their Halloween costumes. And, of course, the month would not be complete without a mailbag show from Motley Fool Answers hosts Alison Southwick and Robert Brokamp. To help them address all your autumnal financial conundrums, Sean Gates, a financial planner with Motley Fool Wealth Management, returns to the studio. 

In this segment, they consider the situation of a guy who will be continuing his education in a year or so. But in the meantime, he's curious: Should he funnel his cash through a 529 until the tuition bills come due, or invest that money for the long term, take out student loans, and hope that his returns will exceed his interest expenses?

A full transcript follows the video.

This video was recorded on Sept 25, 2018.

Alison Southwick: The next question comes from Nate. "I am planning to go back to school in a year for a two-year graduate degree. I have enough cash, now, to pay for it. Would it be smarter to put it into a conservative 529 plan to get some slight tax savings, or should I invest the money, take out loans to pay for the degree, and assume that at some point in the next decade my gains from stock investments will be greater minus capital gains taxes and interest on the loans? And then if they approve using 529 plans to pay for loans, should I do a more aggressive 529 plan?"

Robert Brokamp: Well, Nate, first of all, good for you for saving enough money to pay for your graduate school degree. I would say play it safe. Use the money to pay for the degree. That way you can graduate debt-free, get your new job, and then start accumulating money in whatever -- a 401(k), an IRA -- whatever you're doing after that point. By doing it the other way -- taking out the loan and then investing in the stock market -- you just don't know what's going to happen.

At the end, there, he brings up an interesting point, and that is for 529s, the withdrawals are tax-free as long as the money is used for a qualified expense. Paying back a school loan is not a qualified expense.

Generally speaking, if you were to take out that money, you would pay the 10% penalty and taxes. However, there is a new proposal now [part of tax reform 2.0], which was just recently brought out that would allow 529 money to be used for school loans, as well as home-schooling expenses and apprenticeship fees. It's just a proposal. We don't know if it's going to become law or not, but it is on the table, so it's something to keep your eye on.

Sean Gates is an employee of Motley Fool Wealth Management, a separate, sister company of The Motley Fool, LLC. The information provided is intended to be educational only, and should not be construed as individualized advice. For individualized advice, please consult a financial professional. The Motley Fool has a disclosure policy.