Heading back to school? Prepare to live on a student budget
Heading back to school? Prepare to live on a student budget
DALLAS — Many workers these days, especially those who have been laid off, are returning to school to learn a new trade or improve their marketability.
While the investment is a wise move, keep in mind that it will be a tough financial adjustment at first.
“Going back to school is a drastic change in your financial life that calls for drastic changes in spending,” said Bryan Clintsman, a certified financial planner with Clintsman Financial Planning in Southlake, Texas.
“Think about how much your spending changed when you went from college life to work life,” he said. “The opposite amount of drastic change needs to happen when reversing this and going from work back to college.”
The problem is that when people go from work life to college life, they are sometimes unwilling to pare down monthly expenses for luxuries that they’ve gotten used to having, he said.
“So you really have to change your whole mind-set and create or remember what the lifestyle of a true college student is like,” Clintsman said.
How to cut costs
Adults have additional obligations that traditional students usually do not have, such as family and household responsibilities, said Ryan W. Huey, a certified financial planner at Perryman Financial Advisory in Dallas.
Here are some ways to lessen the cost of going back to school as an adult:
• Ask the school you plan to attend what financial-aid options are available. Information about federal student aid can be found by visiting www.fafsa.ed.gov.
• If you’re employed, ask your employer whether your company has a tuition-reimbursement program.
“Be sure to look into private scholarships through private organizations, state-specific scholarships and school-specific scholarships that may be available to you as an adult student,” Huey said.
The College Foundation of North Carolina provides information about state-specific scholarships and guidance for adults interested in returning to school. To find out more, visit www1.cfnc.org/Adult_Learner/Adult_Learner_Home.aspx.
• Inquire about the federal Pell Grant program, which provides need-based grants to low-income undergraduate and certain post-baccalaureate students to promote access to postsecondary education.Pell Grants are awarded to students who haven’t received their first bachelor’s degree or who are enrolled in certain post-baccalaureate programs that lead to teacher certification or licensure. Find out more at www.ed.gov/programs/fpg/index.html.
• Apply for benefits available under the federal Workforce Investment Act, which provides retraining and re-employment services for workers who have lost their jobs. The WIA train workers in their current field to lead them toward better jobs in the industry, or retrain workers in a different field.
That’s how John Sparenberg is paying for his efforts to earn his certification as a Microsoft Certified Systems Engineer.
“It’s paying for the books and lab fees and everything,” said Sparenberg, 46, of Dallas, who was laid off from his job as a systems administrator last year.
He said unemployed workers like him, who are collecting jobless benefits while going to school, should consider whether they have the financial resources to sustain themselves if their unemployment benefits run out before they finish their education.
Live within your budget
Depending on one’s income, spending cuts in other areas may be necessary.
“You can nickel-and-dime your way into sizable expense reductions with suggestions which are right under your nose,” said Rick Salmeron, a certified financial planner at The Salmeron Financial Network in Dallas.
Sparenberg said the first thing he did was create a budget. He started subscribing to trade magazines instead of buying them at the newsstand, which saves him about $75 a month.
“The second thing, and by far the biggest expense for a single guy, is you can easily drop 250 extra dollars a month eating out,” Sparenberg said.
He now eats out at the most twice a month instead of eight to 10 times a week, like he used to do. He also reduced his monthly bill for television service to $20 a month from $100 a month.
“I cut out literally everything but the basic stuff,” he said. “You have to start spending a lot more time watching every expense.”
Be on the lookout for savingsIn school, money can be saved by buying used books when possible, and taking advantage of student discounts.
“You might qualify for a student rate to join a trade association,” said Lynn Lawrance, a cewrtified financial planner at Financial Network Investment Corp. in Dallas.
“This could allow you to improve your industry knowledge and build valuable contacts before you’re in the job-search mode.”
There are also tax benefits for higher education that can reduce one’s income taxes.
“They vary widely depending on the type of school, your income level, how many hours you are taking and a myriad of other caveats,” Huey said.
Finally, experts advise setting a deadline for how long you will give yourself to accomplish your education goals.
“What’s the time cost and what’s the financial cost?” said Todd Mark, vice president of education at Consumer Credit Counseling Service of Greater Dallas. “How long would it be for you to re-enter the workforce?
“Without a plan, the longer you’re not working, the longer you’re putting those financial goals on hold.”
