Back to School? College Aid for Older Students
For young people heading straight to college after high school, there are many ways to obtain financial aid. But older students have resources for college funding, too. If electric typewriters were the latest in modern technology last time you took classes, take heart. It's just a matter of finding what financial resources work best for you. Here's where to start.
Ask the Boss
Many employers now pay all or part of their employees' tuition, so asking for help at work is the first thing to do when looking for college funding. Don't be put off if the course of study you want to take is not required for, or even directly related to, your current position.
"Normally, the corporate sponsorships we see are broad-based," says James King, director of MBA recruiting and admissions at the W.P. Carey School of Business at Arizona State University. "And there's always a way to show how graduate work, such as a (Master of Business Administration degree), benefits your work."
Employers typically pay no more than the Internal Revenue Service limit on tax-free employer assistance, which is currently $5,250 per year. Be aware that if you work for more than one employer during the year and you get employee assistance from both of them, you may exceed the $5,250 limit and owe tax on your tuition benefit.
If you decide to take your employer's help paying for tuition, make sure you're committed to the course of study and to your employer. You could get stuck with the bill if you don't stick around the company after you finish your degree or if your grades start to slide.
Scholarships for Grown-Ups
Just because your swim-team days are over doesn't mean you can't find scholarships to help you get back into school. The best place to start looking for scholarships is the financial aid office of the college you want to attend. The advisers there know the most about scholarships available for their students.
King also recommends searching for scholarships at websites such as NextStudent.com.
Loans
Federal student loans are usually preferable to most other types of loans. Not only do they carry low interest rates, but the interest is generally tax-deductible. And if you die before it's paid off, no one else is left holding the bill. "Federal education loans are discharged upon death of the borrower," says Mark Kantrowitz, publisher of FastWeb.com and FinAid.org.
Once you've learned about federal, state and student loans, fill out the Free Application for Federal Student Aid, or FAFSA, form to determine if you are eligible for federal help.
If your house has held its value, you might use a home equity line of credit, or HELOC, to help with college funding. But before you register for classes, make sure your HELOC limit has not changed. Many banks have lowered or suspended lines of credit.
Your own Money
If education is worthwhile, it's worth paying for it, even if you have to use your own money. Fortunately, you're likely to have more cash of your own now than you did fresh out of high school.
If you can afford it without jeopardizing your emergency fund, consider using your nonretirement savings and investment accounts for college funding. Colleen O'Brien, a financial consultant with company Charles Schwab, recommends using investment assets if you can sell the securities. "I wouldn't borrow against the securities because they can go down in value," she says.
Avoid raiding your retirement accounts. "Your retirement savings are something you've built over time," O'Brien says. "You can't get it back if you take it out because you can't contribute more each year. You're better off getting a loan and paying that back when you get a job that pays more money."
O'Brien also doesn't recommend suspending retirement contributions while you go to school in favor of college funding. "You have certain limits each year," she says. "You can't go back. You can get a loan for education, but you can't get a loan to fund your retirement. Your retirement savings are your No. 1 priority at all ages."