Tips for Financing Additional Education to Get the Job You Want after 50
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Job seekers of all ages find themselves burdened with financial obligations as a result of their educational pursuits. Make it a little easier for yourself. Employ some of the following strategies to keep your debt as light as possible.
Avoiding additional debt
Consider your future finances before taking on any significant student debt. Look at it as a short-term investment and weigh the potential return on that investment and the risk. Ask yourself how likely each educational opportunity will produce a return on your investment. Consider your future financial condition if everything goes as planned and if the outcome doesn’t live up to your expectations. Is it worth the risk?
If you’re already strapped for cash, do your best to avoid taking on more debt. Spending $5,000 for training to become a truck driver, for example, may make sense if you’re certain to land a job soon after graduation that pays enough to cover your expenses and the loan in your first year on the job. If you can find a trucking company to cover the cost, even that expense can be avoided.
Applying for student financial aid
The first step to take to pay for additional education and training is to contact the financial aid department at the school or training center you plan to attend to find out whether the program you plan to enroll in is eligible for student financial aid. If it is, you’ll probably be required to submit a Free Application for Federal Student Aid (FAFSA).
Nearly all educational institutions require that students submit their FAFSA to become eligible for any form of student financial aid, regardless of whether the aid is based on financial need. Students of any age can submit the FAFSA and are eligible for federal student financial assistance. Soon after submitting your FAFSA, schedule an appointment to meet with someone in the financial aid department of the school or training center you plan to attend.
If you’re quitting a job to return to school, request a “professional judgment” review to adjust your income, so your financial aid package is based more on projected income than on your past year’s income.
The school’s financial aid rep will put together a financial aid package for you that shows the various forms of financial aid and the amounts you qualify for and how much cash you’re expected to contribute.
Be sure to submit your FAFSA by your state’s or school’s deadline. You’ll need information from your tax return to complete the FAFSA, which is kind of tricky; if you don’t have all your W-2s and other documents to complete your tax return, you’ll have to estimate your income for the year and then file an amended FAFSA later if your estimates are off.
If you’re currently employed, ask your employer’s human resources office about the availability of employer tuition assistance. Many large employers provide some form of tuition assistance. Up to $5,250 (in some cases more) in such assistance is excluded from gross income for income tax purposes.
They may require you to maintain a minimum GPA to get the assistance and commit to working for the organization for a certain number of years after receiving the assistance (or you have to pay it back). Often the assistance is provided as a reimbursement after the fact, so you’ll need to budget for your cash flow needs.
Visit FinAid, click Other Types of Aid, scroll down to the Student Profile-Based Aid section, and click Older and Nontraditional Students for more information. FinAid is a free comprehensive source of student financial aid information, advice and tools.
Applying for grants and scholarships
Although your financial aid package may contain one or more grants or scholarships, you can find and apply for additional grants and scholarships on your own. Research scholarships at Fastweb, where you can find more than 50 awards that have a minimum age restriction of 30 years or older, more than 230 awards with a minimum age restriction of 25 years or older, and more than 1,800 awards with no age restrictions.
Ask the financial aid rep at the school you plan to attend about Silver Scholarships. The Serve America Act authorizes the Corporation for National and Community Service (CNCS) to award fixed-amount grants to community-based nonprofit entities to carry out a Silver Scholarship Grant Program, which provides $1,000 higher education scholarships to individuals age 55 or older who complete at least 350 hours of service in a year in an area of national need. The grant may be transferred to a child, grandchild, or foster child.
Leveraging tax breaks to lower costs
The federal government provides tax deductions and credits to offset educational costs. (A deduction lowers the income on which taxes are calculated, while a credit lowers the taxes owed by a certain amount.) Here are a few of the more substantial federal tax deductions and credits available:
You can deduct the interest you paid on student loans. This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses. The maximum deduction is $2,500 a year.
The Lifetime Learning Credit allows you to claim up to $2,000 per student per year for any college or career school tuition and fees as well as for books, supplies, and equipment required for the course.
You may be able to withdraw from an IRA to pay for qualified higher education expenses for yourself, your spouse, your child, or your grandchild without having to pay an early withdrawal penalty. You will still owe federal and state income tax on the amount withdrawn.
Consult a tax specialist to find out more about federal, state, and local tax breaks to help cover education expenses.
For more information, read IRS Publication 970, “Tax Benefits for Education” to see which federal income tax benefits may apply to your situation.