3 Ways to Fund Your Education as an Adult
Are you headed back to school, either to get an advanced degree or even to finish your bachelor’s? Furthering your education could be a great way to learn new skills, advance your career and boost your earning potential.
Of course, higher education isn’t cheap, no matter what type of degree you’re pursuing. You may also have other expenses to juggle, like housing costs, child care and other everyday bills. Without a plan in place, the costs of higher education may seem overwhelming.
Fortunately, you have options available. There are a number of alternatives that may help you fund your lifestyle and pay for your education. Below are three popular options to consider.
Discuss it with your employer.
Many companies offer tuition reimbursement plans to encourage employees to continue their education. Even if your employer doesn’t have a formal plan in place, it may be open to the idea, especially if the degree is directly related to your role within the company.
Be sure you understand all the strings attached to the reimbursement, however. Your employer may want you to commit to stay with the company for a number of years after you graduate. If you don’t fulfill that commitment, you may have to repay a portion of the tuition assistance. If you’re planning to get a degree so you can find a new job, employer assistance may not be the path for you.
Consider applying for loans.
Another option is to use student loans to fund some or all of your education. If you’re a graduate student you may have the choice of either subsidized or unsubsidized loans. In a subsidized loan, interest doesn’t accumulate while you’re in school. In an unsubsidized loan, interest will accumulate until you begin making payments. If you are a graduate student, you may only have unsubsidized loans available.
It may be tempting to take out loans for the entire amount. However, your loans will have to be repaid eventually. Make sure you understand how much you can afford in terms of student loan payments, and be sure to stay within your budget. If you take out too much in loans, your increased income may all go toward student loan payments.
Tap into your own assets and resources.
If loans and employer assistance don’t cover the full cost, you may have to look at your own assets to pay the difference. For example, perhaps you have a substantial amount of savings from which you could pull money. You may be able to tap into the equity in your home via a loan or line of credit.
It may be tempting to withdraw money from your 401(k) or IRA to pay for school. The IRS does allow exceptions to the 10-percent, early-withdrawal penalty if the funds are used for education. However, you will likely have to pay taxes on the distribution. Also, consider the withdrawal may set you back in terms of retirement savings.
If you have a Roth IRA, you may want to consider using that account to fund education expenses. You can always withdraw your contributions from a Roth IRA without paying taxes or early withdrawal penalties. Again, though, the biggest cost of such a decision may be you put yourself off track to reach your retirement savings goal.
Not sure how to proceed with your educational endeavor? Contact us. We can help you develop a comprehensive plan to pay for your education and to meet your other savings goals.
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15723 – 2016/5/31
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