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Heading Back to School? Make a Plan First
It was the physicist Rosalyn S. Yalow who said, "The
excitement of learning separates youth from old age. As long as
you're learning you're not old."
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 might 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 expert such as a CERTIFIED
FINANCIAL PLANNER™ professional 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.
Check scholarships and grants. See if there are
sources of grants and scholarships not only in your community,
but also within your industry. Go online and do a general search
for such aid.
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, 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. You can't forego
retirement or healthcare planning simply because you need the
money for 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 one year of college will
do, why pay for three or four?
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.
June 2008 — This column is produced by the Financial
Planning Association, the membership organization for the
financial planning community, and is provided by Don McCarty of
Financial Decision Partners, a local member of the FPA.
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