Retool and Retrain: New Education Planning Considerations

The fall tradition of “Back to school” has a new look as we adapt for Covid. However, there are more adults going back to school at 30, 40, 50 and beyond. The reasons are numerous and completing their degree or certificate programs come with unique challenges. Some of the issues have been long-term and others are newer with the disruptions of Covid. Following are some considerations for late stage college planning.

The Numbers

About half of undergraduates are 25 years or older per the National Center of Education Statistics. EAB, another education research firm, estimates the number of twenty-five to thirty-four-year-olds will increase by twenty-one percentage points 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
  • Degree completers: Interruptions from family and military service
  • Keep learning

The Challenges Can Be Burdensome

  • Focus: Get the best bang for your buck – What courses, certificates or degrees and where to get them?
  • Time is not our friend: You don’t have the benefit of funding a 529 Plan for 15 years for the child.
  • Finances: Some feel they can’t afford more education expenses – e.g. existing unpaid student debt, or in a couple, one works while the other goes to school, and then switch.
  • Childcare: Parents seek affordable on-campus childcare.

Funding Opportunities

  • Loans, grants and scholarships: Free Application for Federal Student Aid (FAFSA) is required for Federal programs. Reduced income (furloughs and layoffs from Covid) may help and request aid offices for a “professional judgement” review to consider your award year (reduced) income. Research programs, check Fastweb.com and Scholarships.com and use caution with debt, especially with the potential for rising interest rates.
  • Employer tuition assistance: Many employers provide an education benefit. It may be a reimbursement program so budget accordingly, and may require minimum service and GPA standards.
  • Online learning: The rise in distance and hybrid learning provides more flexibility and choices especially for those maintain part-time and full-time jobs.
  • Coronavirus relief: Federal student loan borrowers may get some relief including suspension of loan payments to December 31, 2020, temporary zero percent interest and multiple payment options.

Using Your Retirement Plans

There’s a rising trend of parents sacrificing their retirement for their children’s education. Borrowing from 401k plans can be tempting for later stage students because “I’m paying myself back.” Consider the following before you borrow or withdraw from your 401k:

  • Will I need this money for my retirement? (A most important question).
  • What potential growth of retirement savings is sacrificed?
  • Can I afford to repay the loan over five years?
  • What are the consequences – including income taxes, borrowing restrictions, and more?

People are heading “back to school” for numerous reasons. Yes, there are challenges. Make it worthwhile. Secure your future wisely.

About Brian Loy

Brian Loy writes insightful and inspiring articles about the ever-changing world of personal finance and the global trends that affect the risk and return on investments and shape the financial- and retirement-planning process.
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