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Going Back to School? Here's How to Afford It

Jul 12, 2020 3 min read Susan Johnston Taylor

Key Takeaways

  • Yes, there are scholarships for back-to-schoolers.
  • Tax-friendly 529 plans aren't just for kids.
  • Go with a loan only if you must.

 

As COVID-19 clouds the environment for higher education, there may be a silver lining for mid-career Americans returning to school to pursue different career paths or advance in their current jobs.

 

 

That’s because the pandemic has made online learning less of an outlier than it used to be. For the 2020–21 academic year at least, colleges across the country are looking to lessen personal interactions (and possible infections). That’s meant moving many (if not all) classes online and encouraging (if not requiring) students — particularly those who live nearby — to commute to campuses.

That’s played havoc for many students who seek the “traditional” college experience. But it may not matter much if you’re merely looking to earn a degree, learn new skills or enhance old ones. Besides, by the time you reach your 30s, you may have other obligations, such as a mortgage and kids, so full-time study may not be financially or logistically feasible. Fortunately, you have options to help you pay for your education while balancing other financial priorities and minimizing student loan debt.

Jonathan Sager returned to college when he was in his 30s to study cybersecurity. At the time, he was working as a mainframe administrator for a bank.

“I was always into computers, and I thought I would be a programmer, but I got stuck taking C++,” he says. “When I got older and the world moved to the web, I found a place that I cared a lot about.”

Because he was already working full-time, Sager took classes online and was reimbursed through his employer’s education plan.

If you are also considering hitting the books again, here are some things to think about.

 

Find financial aid options

Your intended school may have scholarships or grants available to adult learners. These are preferable to loans, because, of course, they don’t need to be repaid. Talk to the financial aid office at your intended school to learn what options might be available to you, and also look for outside scholarships offered by professional associations, foundations or community groups. Fastweb.com has a list of scholarship opportunities for nontraditional, adult and returning students.

 

The 411 on 529s

You may have contributed to a 529 college savings plan for your own child, a grandchild or a niece or nephew, but these plans aren’t just for kids. Adult learners can use them, too, provided they are pursuing postsecondary education that would qualify for federal student aid (career-specific certifications do not qualify). The sooner you start saving in a 529, the longer you’ll have for your money to grow tax free, so start now if you plan on going back to school in the future. Depending on your state, you may qualify for a tax break on contributions.

 

Explore educational tax benefits

The IRS offers several tax benefits that can help adult learners defray the costs of going back to school. For one, if you’re planning to start or finish a four-year degree, you may qualify for the American opportunity credit Opens in new window , which is available for up to four years per eligible student. This entitles you to a tax credit of up to $2,500 per year. Alternatively, you may qualify for a lifetime learning credit Opens in new window of up to $2,000 for an unlimited number of years, but you can’t claim both credits in the same year.

 

Tap into tuition reimbursement programs

Employees of a college or university may qualify for free or subsidized study, while military veterans may have educational benefits available under the G.I. Bill. Some other employers, including Sager’s, are beginning to offer tuition reimbursement or employee student debt benefits to put their employees on a course for financial security. If your employer offers this benefit, talk to human resources to learn more. You may discover, for instance, that your employer will only cover a certain amount per year, or total per employee. Or your employer might require you to repay any tuition reimbursement if you leave your job soon after taking advantage of that perk.

 

Borrow smart

Student loans are another way to fund your education, but you may want to exhaust other options before you borrow. Peter Gayle, a vice president for Prudential Advisors, says you should research both private and federal loans, so you can understand all your options. (StudentAid.gov has the skinny on federal loans Opens in new window, while Finaid.org recommends comparing private loans Opens in new window at Credible.com.) Then you can choose the loan that best fits your needs and financial situation.

Federal loans typically have more-flexible repayment options. A popular choice for repayment includes income-driven plans, which calculate payments based on a borrower’s ability to repay. When debt becomes too burdensome, some loan programs offer forgiveness through public service, federal government employment and options such as teaching in underserved school districts.

 

What you can do next

Returning to school — and finding a way to pay for it — takes some planning. There are a wide range of options to explore. Just make sure that borrowing is at the bottom of your list.

 

Footnotes

 

Susan Johnston Taylor writes about small business, entrepreneurship and personal finance. Her articles have appeared in The Atlantic, The Boston Globe, Entrepreneur, Fast Company and the money section of U.S. News & World Report online.

 

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