(Refinance to low mortgage AND High Interest Education Loan) OR (High Mortgage Interest AND No Education Loan)?

We have a primary mortgage of 201,000 USD at 6.125% 5 year arm with 1.5 year left on the terms.
We have a secondary mortgage of 39,000 USD at 4.125% variable interest rate. The house value is estimated at 211,000 USD.

We have about 40,000 USD in our checking account and no savings.

I will be going to school for a Physical Therapy program. My tuition fee for 3 years will be 40,000 USD. I am getting a fedral direct unsubsized loan at 6.8% with upto 10,000 USD disbursed each time starting this fall.

My husband has a steady job and makes around 100,000 USD.

How should we best manage our finances???

1) Should we save the 40000 USD for my tuition and not take any of the 6.8% education loan? We will try to refinance to whatever best rate we can get under the Home Affordable Refinance program

2) Should we pay off the secondary mortgage with our checking account balance and refinance the primary mortgage 201,000 USD loan to a 30 year fixed 4.3%. This means we’ll have to take the 6.8% education loan atleast for the first 2 years (around 25000) and hopefully we’ll saved 15000 USD by the time its 3 year to pay off the remaing education tuition ?

What do you think?

Sincerely,
JP

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