Reorganize and recycle: new considerations in educational planning
The fall tradition of ‘back to school’ has a new look as we adjust to COVID. However, there are more adults who return to school at 30, 40, 50 and over. There are many reasons and there are unique challenges to completing their degree or certificate programs. Some of the problems have been long term and others are more recent with the COVID disruptions. Here are some things to consider when planning for advanced-stage colleges.
About half of undergraduates are 25 or older, by the National Center for Education Statistics. EAB, another educational research company, believes the number aged 25 to 34 will increase by 21 percentage pointss by 2022. These figures are before the impacts of COVID.
Why go back to school?
- Career change: workers facing automation or obsolete industries
- Increase earning potential
- Expand career options
- Stay competitive or marketable
- Graduates: Interruptions from family and military service
- Keep learning
The challenges can be heavy
- Focus: Get the best value for money – what courses, certificates or diplomas are available and where should you get them?
- Time is not our friend: you don’t have the benefit of financing a 529 plan for 15 years like you would with a child.
- Finances: Some feel they can’t afford more for tuition fees – eg. Ex., Existing unpaid student debt. Couples often send one to work while the other goes to school, then switch.
- Child Care: Parents are looking for affordable child care on campus.
Loans, grants and scholarships are available. A Free Application for Federal Student Aid (FAFSA) is required for federal programs. Those with reduced income, perhaps due to COVID time off and layoffs, can ask help desks for a “professional judgment” review to factor in your (reduced) annual income. Research and monitoring programs Fastweb.com and Scholarships.com. And be careful with debt, especially with the potential for rising interest rates.
Employer tuition assistance is another option. Many employers provide an education service. This may be a reimbursement program, so budget accordingly, and may require minimum service and surrogacy standards.
Online learning can be a cheaper alternative. The rise of distance and hybrid learning offers more flexibility and choice, especially for those retaining part-time and full-time jobs.
Due to coronavirus legislation, federal student loan borrowers may get some relief, including suspension of loan payments until December 31, 2020, zero percent temporary interest, and several payment options.
Some may choose to use their own pension plans. Parents increasingly tend to sacrifice their retirement for the benefit of their children’s education. Borrowing 401 (k) plans can be tempting for more advanced students because “I pay myself back”. Consider the following before borrowing or withdrawing from your 401 (k):
- Will I need this money for my retirement? (A very important question).
- What potential for growth in retirement savings is being sacrificed?
- Can I afford to repay the loan over five years?
- What are the consequences – including income taxes, borrowing restrictions and more?
People go back to school for many reasons. Yes, there are challenges. Make it worth it. Secure your future with wisdom.
Brian Loy, CFA, CFP, is President of Sage Financial Advisors Inc., based in Reno. Contact him at www.sagefinancialadvisors.com.