If you are an adult who considers going back to college, whether it is to remain competitive in your field, advance in your career, or learn new skills, you are not alone. It is estimated that a record 21.8 million students are attending American colleges and universities this fall and roughly 8.7 million of them are older students, ages 25 and up.1
Determining how to balance work, family, personal passions, and other grown-up demands with college courses can challenge adults who return to school. Another challenge for many is determining how to pay for those credits — regardless of whether you still work and earn income, return to school due to a lay-off, or choose to take a break in your career. The good news is that there are a variety of resources available to you. As you look at ways to make it all work, here are a few steps you may take:
• Think things through — Whether you plan to stay in your career field or enter a new one, carefully research what you can expect to make. Start by using an online salary calculator for approximate salary figures in your geographical region. Doing so can help you make realistic choices on how to pay for your education and ensure that you do not spend more than you can comfortably afford. If you choose to use loans to pay tuition, it may be a good practice to borrow assuming that your salary will not increase significantly so that any pay increase you do gain can fund financial goals other than paying back loans.
• Look at your total expenses — Although you may not have campus housing costs, you could incur other education-related expenses such as technology fees, transportation and parking, or childcare. Talk with an admissions counselor to see what costs you should anticipate and whether they have services or programs that you may take advantage of to help with these incidentals.
• Apply for federal aid — Federal Student Aid, a part of the U.S. Department of Education, is the largest provider of student financial aid in the nation. Financial aid is not just for first time students. It provides grants, loans and work-study funds to qualified students attending college or career school. To learn more or to complete the Free Application for Federal Student Aid (FAFSA) form, visit fafsa.ed.gov. Keep in mind that some financial aid is awarded on a first-come, first-serve basis, so it is better to apply sooner than later.
• Search for scholarships — You may be surprised to learn that many scholarship programs do not have an upward age limit. Furthermore, there are scholarships specifically for adult students. Also, consider talking with your employer and school admissions counselor or program director to find out whether you qualify for any scholarships, discounts, or tuition reimbursement programs they offer. If you have been laid off, check with your former company's HR department to find out if they will add education or retraining benefits to your severance package.
• Determine if you qualify for tax credits — There are two tax credits that may benefit you. The first, the American Opportunity Tax Credit, currently offers up to $2,500 of the cost of tuition, fees, and course materials paid during the taxable year for each of the first four years of post-secondary education (while enrolled at least part-time). Also, 40 percent of the credit (up to $1,000) is refundable for qualifying taxpayers even if you owe no tax. The second, the Lifetime Learning Credit, offers up to $2,000 per return to students who are taking one or more post-secondary education and courses to acquire or improve job skills. For help determining your eligibility, and for information about other education-related tax benefits, visit irs.gov.
• Set up a 529 plan — A 529 plan is an educational savings plan operated by a state or educational institution. Designed to help families set aside funds for future college costs, these plans are not only for young students: they are good for students at any age. Depending on your situation, you may qualify for state tax deductions or credits, or matching grant programs within the plan. Keep in mind that any leftover plan assets are generally transferable among relatives income tax free (and gift tax free if in the same generation).
Going back to school can be a very rewarding experience, but it can come with a large price tag. Fortunately, there are many options for affording school at any age. After determining what your education will cost and whether you qualify for aid, scholarships, or tuition reimbursement, consult with your financial and tax professionals. They can help you assess the best way to pay for your remaining education costs, whether it involves balancing with your current savings goals, setting up a 529 plan or other investment, or taking out a loan.
1 U.S. Department of Education Institute of Education Sciences National Center for Education Statistics, 2013 Back to school statistics, http://nces.ed.gov/fastfacts/display.asp?id=372.
Ameriprise Financial does not offer tax or legal advice. Consult with a tax advisor or attorney.
Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC.
This communication is published in the United States for Texas only; and this advisor is licensed only in the states of CA, CO, FL, KS, MO, NC, NM, OK, TX, and VA.
M. Ahmad Adnan, CFP®, CRPC®, RFC®
Business Financial Advisor
Ameriprise Financial Services, Inc.
3200 Steck Avenue | Suite 250 | Austin, TX 78757
Phone: 512.213.6400 Ext. 102 | Toll Free: 866.238.4230
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