Tips for Going Back to School and Continuing Your Education
Weigh the Financial Impact of Continuing Education
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Thinking about heading back to school? You’re not alone.
The number of people age 35 and older enrolling in colleges and universities has increased by nearly one-third in recent years, jumping from 2.8 million in 1996 to 3.7 million in 2010, according to the U.S. Department of Education.
The long-term benefits of going back to school are certainly attractive: More education can increase your earning potential, introduce new career opportunities and decrease your risk for unemployment. But at what cost?
If you have a growing family, aging parents, a mortgage or other financial responsibilities, there’s a lot to consider before sending in an application (See graphic at the end).
Get a handle on your finances
Tiaudra Shaw, CFP®, with SunTrust Investment Services, says individuals thinking about returning to college or pursuing an advanced degree should start the process by better understanding their financial situations.
First, it’s vital that everyone in your household is on board with a potentially significant change to your budget.
“One of the leading challenges in a marriage deals with finances,” Shaw says. “It’s important to make sure the whole family is invested in your success through schooling.”
It’s also crucial to figure out how much you can afford to scale back and adjust financially, based on household income as well as current and future expenses, Shaw says. You may not be able to change your biggest costs, like paying your mortgage. But you can look at smaller expenses that add up, such as cable TV options or how much you’re dining out.
If you need help with your budget, consulting a financial advisor can be a good investment, Shaw says. Though working with advisors typically is not free, they can help you avoid miscalculations and sort through more difficult financial scenarios, such as calculating your debt-to-income ratio.
Consider costs and earning potential
Once you have a clear picture of your current finances, it’s time to calculate education costs. The annual cost of graduate programs can vary considerably based on whether a school is public or private, in-state or out-of-state, and if your program is full-time or part-time.
It’s important to look at the true cost of education when making budget calculations, Shaw says. Talk to university advisers and ask about how much students can expect to spend on fees, books and equipment, in addition to tuition.
Also, when choosing a program and a school, think about your long-term goals and earning potential. Shaw tells her clients to research the marketability of their new field, both employment opportunities and salary expectations. Make use of the U.S. Bureau of Labor Statistics’ searchable database of salaries (www.bls.gov) as part of your research.
Approach loans with caution
Calculating the cost of going back to school often results in conversations about financing methods. In some cases, people look to bank loans. If you go that route, Shaw recommends keeping your debt under 36 percent of your gross income. A debt-to-income ratio beyond that level becomes difficult to manage and can affect your long-term financial well-being.
Financial aid programs can be a viable alternative to loans, though competition for aid is fierce, and the application process can be time-consuming. Be sure to find out if your university offers funding for graduate students who take on school-related work, such as teaching or editing academic journals, Shaw says.
Leverage your experience
The reality of going back to school as an adult with financial and familial responsibilities might mean working full- or part-time while attending class. If you’re already working in the field in which you hope to earn your degree, you’re one step ahead. Shaw knows the situation well.
While working to earn her MBA, Shaw continued working full-time in the financial services industry and was also a graduate research assistant. She’d work all day, take class at night and then tackle her research duties. In the end, while very strapped for time, Shaw spent only about $500 out of pocket.
Sometimes, being a full-time employee and student simply isn’t feasible financially or lifestyle-wise. In these cases, a part-time education program might be an option. On the other hand, if you can afford to take full-time classes because you have a two-income household, for example, another option is to find a weekend or evening job with flexible hours to continue bringing in some money to help with minor expenses.
Amid all these considerations, it’s most important to remember the value of your time, Shaw says. Regardless of your motivation for going back to school, you can always adjust your plans.
“You can always hit pause and come back to finish a program when time and money is a bit easier to come by,” Shaw says. “Sometimes we push ourselves and set these goals, but as your life changes, just like anything else you need to re-evaluate. If you’ve balanced appropriately what you can put in financially and time-wise, if you need to walk away, you can.”
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