Paying for College in Mid-Career
In this article, we'll look at better ways to finance an education for the mid-career or adult student looking at options to finance a new career or career advancement. However, the ideas and comments can apply to anyone seeking college. In general, investing 10% of your lifetime earnings into education is a good rule of thumb that I have seen applied many times.
An average amount of time it takes to achieve an associates degree for a career change, a master's degree/MBA or a fast-track bachelor's degree for an adult student is eighteen to twenty-four months. Earning a bachelor's degree might take longer if there are a minimal number of transfer credits.
The average college student will leave college with $23,000 in student loan debt and student loan interest is increasing to 6.8% on Federal loans according to an article on student loan debt and rates with about 65% of students getting loans.
The word average applies to the typical twenty-something student as well as the mid-career professional looking to change a career or advance the skills and needs the financing options to pay for college.
Student loan debt reported by the Consumer Financial Protection Bureau posting on debt shows that that the total student loan debt has now passed a trillion dollar mark in federal and student loans. This weighs on the economy, given that other purchases must be delayed in order to pay for the debt.
According to the College Board, most undergraduates pay about one-half of the tuition that is the list price for a college or university. As noted, this applies to undergraduates at, typically, top-100 schools according to US News and World Report.
But in reality, most mid-career students cannot take off one to two years to achieve an advanced degree or change careers.
So, what do graduate level students or mid-career professionals do?
When looking at options to to go back to college, the starting point is to look at the lowest cost of a college credit or period of time, since that will be needed to achieve the needed career or degree.
Two key numbers to focus on are: 1) Credit cost of about $250 - $400 per credit and 2) Average year cost of $6,000 per year.
There are other options from a community college that offer less than $100 per credit. One thing to consider, however, is to look at whether the advanced degree options and mid-year certificates for adult students will meet your needs. (Most community colleges still focus on the associate level credits and programs.)
Options like American Public University and American Sentinel University offer credit hours that allow for fast-track options for the adult student using online education options. In looking at any program, confirm that the program will provide you with the ability to get a certification from the state your career requires, and that career option will offer enough compensation to pay for the investment in your education. (A good source for this is Salary.com).
While online education has various outcomes for younger students below the age of twenty, it is a consistently strong option for adult and career-switching students in the thirty-plus age group.
Tuition ranges from $250 for undergraduate to $350-plus for graduate courses. This is in contrast to programs at other schools that can charge up to $600-plus per credit.
Another school option to think about is with Western Governors University. Their model is very different and they are achieving success with a flat rate of $3,000 every six months or $6,000 per year. You can take as many courses as you'd like and you are awarded credit based upon a series of outcome tests that measure skill knowledge. With an average completion time of twelve to eighteen months for a graduate degree, you will pay about one-half of what you'd pay at most other schools.
Finding the funds for school
So far, we have looked at minimal cost program costs, now, let's look at creative ways to find money and loans.
FASFA is the one-stop place for student loan applications. So apply!
You might be surprised that you are eligible for loans even if you have a job and earnings. Student loan interest is deductible on your taxes and with a proposed new rate of 6.8% as of July 1st, 2012, this could save you quite a bit. (The Lifetime Learning Credit allows part of college expenses to be deducted.)
For the mid-career adult, there are other creative ways to come up with the money to pay.
One way is to use a home equity line of credit or home loan with rates offered at about four to five percent of the annual percentage rate (APR). There is a risk with using an asset like a home to pay for your education, but the assumption is that the program or degree will allow you toget that ten to twenty percent increase in salary which will bhe able to pay for the loan over a ten year period.
Other options include a loan against a 401(K) plan or a whole life insurance. Before you do this, be aware of the repayment terms and structure of when the amounts have to be repaid (based upon leaving a company, for example).
Another option that is a bit more creative is to form a part-time company that offers education benefits as an option to its employees. If you become an employee of your own company, the tuition could be deducted as an expense for the business.
While controversial, with need for review by a tax professional, it is an option. Employee and education benefits are described in the education docs.
In all, keep in mind that the key to a successful mid-career education is to locate the best value and shortest duration programs and degrees that will benefit your career.