Thinking About
Going Back to College? Make a Plan First
You’re in your
40s, 50s or beyond and you’ve either always dreamed of going back to
school or realized you need a degree or extra preparation to get to the
next level of your career. The mid-career college plan should be very
different than the one you and your parents had in place when you were 18
– and that’s probably a good thing.
A July/August 2006
story in AARP Magazine by noted workplace and career expert
Rosabeth Moss Kanter pointed out that retirement-phobic mid- or
late-career types may retreat to college campuses instead of the golf
course to prepare for the next phase of their life. Why? They want to
train for completely new careers in all-new professional fields or public
service. According to the piece, "Traditional volunteering is not
what leading-edge boomers have in mind. They want to be leaders and to
help improve the world." Education will be a part of that movement.
The back-to-school
movement for older Americans is an interesting one, but it goes beyond
purely financial considerations. It makes sense to discuss your ideas with
a tax professional and a financial planner before you make a move:
Do you really need
the degree? Depending on
the field, many employers will look at an experienced worker and take
their particular work and life accomplishments into consideration when
hiring. An MBA or other advanced degree may be personally fulfilling, but
you have to consider whether your future plans really require it and
whether the degree will pay for itself in the end in salary, opportunity
or both.
Are you planning to
attend school while working or will you take time off?
Going for an aggressive degree program while working full-time can be
financially, mentally and physically draining. Obviously, if you plan to
take a sabbatical and go to school full-time, that’s a more complex set
of financial issues you need to consider well in advance, and you should
get help planning for it. Beyond finance, you need to be prepared for the
demands of school on your time with family, friends and your personal
relaxation. Time is an opportunity cost you can’t get back.
Check your
qualifications for federal and state tax credits.
Both the federal Hope Credit and the Lifetime Learning Credit are among
options you may consider to help cushion the tuition blow if you qualify
– discuss these credits and other ways to afford college with your tax
expert as well as your planner.
How prepared are you
to take on debt? It would
be wonderful to pay cash for a college degree, and with time and planning
you might be able to do it. But if you need to take out debt to pay for
your coursework, make sure your credit cards and other debt are paid off
first. You’ll put yourself in the best position to afford any student
debt you take on.
Will your company
pay? Take advantage of
every educational break you can take before you leave your company. If
they require you to stay a certain amount of time after attaining your
degree, work that into your plan.
How’s your
retirement and health plan? It
might seem like a good idea to raid the retirement plan or milk the home
equity to go back to school, but you need to research whether that makes
sense for you. Despite your current energy and determination, no one has a
guarantee of perfect health through the last half or third of their lives.
Also, you need to plan to keep funding retirement if you’re still
working and managing your retirement plan if you’re heading back to
school.
Consider a
functional degree. All
sorts of colleges – even the nation’s most prestigious schools – are
considering abbreviated graduate and post-graduate programs that give
students exactly the amount of education to upgrade their skills and head
back into the workforce. If a one-year program will do, why pay for two or
three?
Are your school
choices friendly to older students? It’s
your money. Make sure you’re attending an institution that considers its
older students a valuable addition to its campus and makes you welcome.
August 2007— This column is
produced by the Financial Planning Association, the membership
organization for the financial planning community, and is provided by
McGuire & Co., LLC, a local member of the FPA.
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