Paying for school...

iVillage Member
Registered: 04-08-2008
Paying for school...
7
Sun, 09-16-2012 - 2:05pm

I am FINALLY going back to school after 10+ years to finish an accounting degree. I started it, then switched to Bus Admin, then switched to Economics and then changed my mind again. I think I thought that the degree would be the MOST important factor in my career...not realizing that most jobs say "degree, preferably in related field!!"...

We can't really afford to pay for school upfront unless we cut back dramatically on debt repayment. Our one loan is at 4% and we currently pay $500-1000/mont depending on the month.

If I take out a student loan, it is interest free. In addition, my work will "forgive" the provincial gov't loans (at 1/3 per year). But I can't take out ONLY provincial gov't loans - the larger portion will be Canadian (national).

So I'm toying with the idea of a taking out the loan interest free and keeping my debt repayments high (thus paying less interest) and then saving a small portion each month for the school loans (interest free savings account).

I know serenity asked this question and she decided against it...I guess I need to be talked out if too bc I really think this isn't such a bad idea???

Dee

iVillage Member
Registered: 04-16-2008
Sun, 09-16-2012 - 8:14pm

What will the amount of the loans be and what will be a realistic projected income with that degree?

Before I took out a huge (about US$65,000) student loan mid-career, I did a projected budget for the 2+ years of going to graduate school part-time and working full-time, and the 5 years afterwards to see if I could afford the loan.  I used very conservative figures for my income (i.e., not figuring in any raises even though I almost always get a small amount of increase every two years or so plus adjustments for inflation) and added a 15% contingency to expenses.  Based on that "budget", I know I could pay off the entire student loan in 5 years and not having a significant impact on my other financial plans.  At the end I managed to pay off everything in less than 3 years.

Perhaps it would be useful if you could go through a similar exercise before making a decision?  It may not make sense for Serenity, but it may make sense for you.  If that's the case, certainly we should not talk you out of it.

 

P.S.  To clarify, the terms of the loan was 20 years.  I used 5 years in my budget because that was my personal tolerance - I did not want to be in debt for that long.

 

 

Community Leader
Registered: 08-25-2006
Mon, 09-17-2012 - 12:07pm

How exciting for you!  I don't know about Canada, but I believe that here in the states there is high demand.  I work for CPAs and we used to get over a hundred resumes for one position, and in more recent years, we only get a handful of resumes and few even meet our qualifications. 

But as far as the loan, I didn't need it to pay for tuition.  It would have only been a bandaid to surplus my income.  I get just (barely) enough grant money to pay for tuition and books. If I needed a loan to pay for tuition, I would reconsider. 

I know that when I got my financial aid paperwork, I had 30 days to decided whether to accept the loans in full, accept a smaller loan amount, or decline. 

I think D gave you good, sound advice. 

Lastly, don't lose sight of your dream, either.  Opportunity cost may be different for you, than for others.  Chances are high that if I start in a new field of work with only a 2 year degree, I will actually make less per hour than I do now.  But if I didn't move forward with a little bit of faith, I would continue to remain stiffled at a "job."  Your happiness in a career you love, may outweigh getting out of debt quick. 

Only you can decide. 

Serenity
iVillage Member
Registered: 12-31-2010
Mon, 09-17-2012 - 8:18pm
Dee-
You have gotten some good advice regarding projecting possible income and a repayment budget.
Personally I did go back to school as an adult for my Masters in Business. It was the best thing I ever have done, and it opened up so many opportunities for me. I did take $16k in student loans, at 3.25%, and I just pay back slightly more than the minimum now since the interest is also tax deductible, but over half is already repaid.
You already have experience in the field and understand some of the demands, so it is not like you are going in blind.
Try to get the education you need to to what you dream!
-Marie
#Marie
iVillage Member
Registered: 04-08-2008
Mon, 09-17-2012 - 11:09pm

I'm actually in procurement so it is not EXACTLY related...but I have some accounting experience too. Mostly short term budgeting and resource allocation.

I also plan to get a certification in procurement...but that is offered free through work. :smileyhappy:

I am also halfway through the financial managment certification at work (I can't finish the higher level courses unless I have a position in that field, BUT many will take you if you have the first half finished and just sign you up right away to finish).

So basically, this degree is just covering my bases. I have in the past worked my BUTT off for a promotional opportunity to see a lesser candidate get it over me. The reason alway is...well...s/he has a degree and you don't. Once the person admitted to me they didn't even have a degree so I KNOW that is often an excuse. But at least I eliminate one more excuse ;-)

And before you think, wow that is certainly a lot of schooling to take on...I taught myself political science, quantum physics and many other subjects over the last couple of years. Time I directed that love of learning in a financially beneficial way, LOL.

Dee

 

iVillage Member
Registered: 11-14-2008
Tue, 09-18-2012 - 3:16pm

When ever I hear this question I try to quantify it. 

Wether you are going to school for the first time or going back for more education I think it is the same. Will you be able to make as much your first year starting as the total of the loan. 

If you are going to be a nurse and use $40,000 in student loans is the starting position for this career 40 grand?

If you are going for your masters and you use $16000 in student loans, can you add that much to your salary?

If you can't, it takes forever to pay back and will interupt and in many cases diminishe the chances you will ever meet the rest of your financial goals. 

Something to think about in your plans. 

Avatar for poorboy2011
iVillage Member
Registered: 10-02-2011
Tue, 09-18-2012 - 8:34pm

You may want to look at the cost of your potential (not sure how to phrase this):

-- How much money are you missing out on because you didn't complete the degree? Does that make sense given how much you already paid for the course work?

-- How much more money will you be making after completing the degree?

Schooling is expensive, and if you have already paid quite a bit, and could finish in a year or two, it may be worth the investment. You don't want the tuition you have already paid to be for nothing.

I'm not good with money, which is why I'm here. So take my advice with caution.

Since I'm in education, I feel like encouraging everyone to finish his/her degrees. It is true that in many fields, the degree is a pre-requisite, even if you can acquire the necessary skills through other means (self-study, for example). I also realize that education is a business like most other things, and we are out to make your money...

iVillage Member
Registered: 04-08-2008
Tue, 09-18-2012 - 9:58pm

Sigh...such good thoughts and suggestions.

There really is NO guarantee that you are going to increase your salary tho :smileyhappy:

But let's assume I can get at least the next level up in my field (+$5.5K/yr) and the dream being a senior manager position (+$30K/yr).

School is going to cost $11K/yr. (allowing for 5% inflatoion in year2). But I save $2200/yr on transit being a student. So that's really only $8897. IfI do the student loan (interest free), there is a great chance of a loan forgiveness of 1/3 ($3667). And  slight chance of scholarships of $1K/yr - to $2500. 

The increase in salary for my next level up would pay for it in 2.7 yrs (allowing for my marginal tax rate of 40%).

Since I won't need a bus pass, I'll put my $175/mo I am currently paying in a TFSA. That will give me $4725 plus interest when I graduate. PLUS, I will take the tax refund money and add in there. I *should* be able to put another $1-2K in there. I would be very near paying off the whole off at grad. Plus, our car loans will both be paid by then so another $800/mo will be freed up for this...

Wow, now I feel so relieved and my course is clear :smileyhappy:

Dee