Financing Your Study
Bryan Wong

Defined Tag: Tax and Finance.

You've decided to go back to college to get your degree -
that's great, as more career opportunities will likely open
up for you, as well as being able to earn more money. 

However, to get that degree, you're going to have to spend
some considerable money in order to be able to take the
courses you need to take and complete. 

First, you need to determine how much the courses and
supplies you need to take the courses (such as your
computer, Internet connection, printer, etc.) will cost,
then you need to see how much of it you can afford to pay
out-of-pocket. Obviously, the more you can pay yourself, the
better, as you want to try to avoid taking out loans to pay
for this as much as possible, since you will need to pay
that money back or risk ruining your financial credit
history. With other cost-of-living expenses you likely have
in your life now, adding another one would only be as a last
resort, not as a first option. 

Check over your current expenses and see if there is
anything you can cut back on and/or eliminate - perhaps
eliminating cable channels or cable all together to reduce
or eliminate your cable bill, eliminating call waiting to
reduce your phone bill, not having your shirts and pants
ironed as much to reduce your laundry costs, cutting back on
utilities and electricity use to reduce those costs, etc.
Any bill you can make less expensive or eliminate all
together will give you more money to pay for college costs
yourself. 

If you are pursuing a higher degree in the same field you
obtained your bachelor degree in, see if your employer will
reimburse you for all or part of your tuition - after all,
his/her company will benefit from your higher degree because
of your upgraded skills and knowledge, so they would likely
be willing to reimburse you to some extent. 

While most scholarships and grants apply to high schoolers
about to enter college for the first time, there is free
money available for "nontraditional" students as well. 

You should file the Free Application for Federal Student Aid
(FAFSA) to see what federal aid you can attain to help pay
for your education. 

However, don't stop there; many colleges and universities
offer institutional grants and scholarships, including for
"nontraditional" students. Some states also offer grants.
Also check with your local department of labor for
vocational educational grants and opportunities. Finally,
make sure you utilize the many free scholarship search
engines on the Internet to see what other forms of aid you
can apply for. 

Even with these measures, it's possible you may still have
to take out at least one loan to pay for your education.
Graduate students can borrow up to $18,500/year on federal
Stafford loans, which carry a relatively low interest rate
of 6.8%. Plus, you normally have 10+ years to pay it off.
For those who need extra cash, you can get it through the
new Graduate Plus Loans, (which debuted in July 2006,) but
the interest rates for these types of loans are higher than
6.8%. 

If you can plan ahead, you can take advantage of some of the
tax-sheltered savings vehicles that are available to younger
students and their parents. Section 529 college-savings
programs are one example. These allow for tax-deferred
investment growth in mutual funds or other investments, with
withdrawals being tax-free if they are used for college
costs. 

Another option is to open up a Roth IRA if you're currently
working. Money reflecting your original contributions can be
withdrawn tax-free at any time, while earnings can be
withdrawn tax-free if the account has been held at least
five years, along with certain other conditions being met. 

Another option is to withdraw money from your traditional
IRA - the withdrawals are taxable, but you can avoid the 10%
penalty that normally applies if you use the money for
college costs. Another source of funds can come from the
Lifetime Learning Credit, a federal tax break that is worth
up to $2000/year. 

As you can see, there are many sources of cash you can use
to fund your return to college. To find out about every
resource you can use, you need to research online, as well
as through the documentation the college's financial aid
office sends you. This will obviously take time. That's why
it is important to not just decide to go to college at the
last minute and then try to frantically do research on what
monetary resources there are so you can afford the cost. 

Instead, plan ahead of time - if you plan on going back to
college, do so in 6-12 months if at all possible, planning
your budget, cutting back on unnecessary expenses,
researching all the monetary resources available to you, and
preparing to adjust to coursework again. If you do it in
this fashion, it will be less stressful on you and your
family and will enable you to perform better in your
courses. 

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