Category: Personal Finance

The Cost of School

We all know higher education in the United States is expensive. Tuition rates are rising fast. We see this information all over the news because national student loan debt, which the Federal Reserve declared to be over $1.3 trillion last year, may be holding back economic growth.

Student loans can hold the individual back, too. This article from Forbes summarizes a survey that found many people have pushed back decisions to marry or have children because of student loan debt.

I’m a huge proponent of going back to school. I value education and the experience of learning. I also believe that everyone needs to be aware of the numbers. This could be you, if you decide to put thousands of dollars towards a degree.

Nontraditional students have the benefit of experience when it comes to considering the cost of school. After a few years of experiencing the real world and being in the workforce, those statistics mean something. A nontraditional student won’t be as gung-ho about signing documents for student loans they don’t understand.

Here’s a few questions to think about while you’re considering the cost involved in going back to university.

How much can I afford right now?

Tuition is only one factor. Don’t forget to work in the price of books, supplies, and tutors (if you need them). Many schools also have a long list of fees to cover extras like parking, library use, and payment processing. This is all relevant to how much you’ll be paying.

Take a close look at your budget. How much is available every month to go towards tuition? How much can be taken out of savings to pay for school? What can be sacrificed from my budget to open up more money to put towards school.

Don’t feel bad if you don’t have a lot of wiggle room in your current budget. After all, one of the reasons you’re considering getting a degree is to increase your income. But it still needs to be the first place you check because you’ll want to know what resources you have available before you start thinking about the next question.

How much am I willing to take out in loans?

The answer to this question is heavily dependent on your risk tolerance. How much debt you’re willing to get into is very personal. It will vary from one person to the next, so don’t be afraid to be honest with yourself about your risk tolerance and don’t base your answer on someone else’s.

Get to know the current interest rates. They’re easy to look up, and you’ll also see them when you fill out your FAFSA. They vary a little from year to year, and it also depends on the type of degree you’re studying for.

Other budget restrictions may come into play, here. You may have already maxed out loans from a previous school. Or maybe you can’t take on new lines of credit because you’re watching your credit score. Like I said before, this question is very personal.

What will my degree be worth?

With this question, I intend for you to ask yourself how much money you plan on making in a new career field after you get your degree. The emotional value of school is important, but not fitting for a blog post about money concerns.

Average incomes from varying jobs can easily be googled. Try typing in several titles from a related field to see what’s possible for you with your degree. Check the website from the Bureau of Labor Statistics to see what opportunities in your field will be available over the next few years. This research should give you a decent idea of what kind of income to expect, though it may take a few years of getting experience to get there.

The information you find from that research may make you go back and change your answers to the first two questions. That’s a good thing. You should be asking yourself these questions regularly, both before starting school and after you’ve enrolled. Regularly checking in with yourself will help you stay on track, financially.

These questions are good focus points both before committing to school and after. They should be part of the process of choosing a school.

Making the decision to go back to school should be carefully weighed. Being a nontraditional student, while incredibly rewarding, is also incredibly difficult. Doing this work now will save you time and energy later so you can focus on your studies.

Financial Wellness Check

I remember the first time I heard of this concept. It was last year during Financial Literacy Month, which occurs every year during April. My SO, Brian, and I combined our finances a few months prior to that, and I was put in charge of budgeting and allocating funds for savings.

Honestly, I thought we were doing fine. A little was getting saved every month and all of our bills were getting paid. But I knew we were in debt, too. Both of us had school loans and car loans, I had a signature loan and was considering going back to school at the time (which I did!), and we were working on getting our credit up. Why not do a wellness check? How bad can it be?

What is a financial wellness check?

A financial wellness check takes into account all the various elements of your finances and allows you to see the big picture. You have to calculate how much money is coming in every month. You have to know what every monthly bill is (or estimate for varying amounts like gas or electric). You have to pull up receipts and credit card and debit card transactions to find out where the extra money is going. How much interest are you paying on your debts? How much of that income was saved? How much of that income was invested?

Finally, it also requires you to determine your net value. I did this for Brian and me combined since all of our finances are combined anyway. In simplest words, net worth is the difference between your debt and the value of your assets. Assets aren’t just stocks and bonds. They can also be artwork, jewelry, technology, or anything else valuable that you could sell.

Why is all that so scary?

I don’t have a reference, but I remember reading an article around the same time I was doing this that said people don’t want to face their debt. It’s no secret that the United States is in a debt crisis due to the build up of credit card debt and student loans. When that debt gets to the point that it’s crippling your way of life, sometimes it feels better to bury your head in the sand and tell yourself you’ll face it tomorrow.

Unfortunately, that’s not how problems get solved. Problems don’t just go away when ignored. Financial problems in particular have a nasty habit of building up and getting worse if left unaddressed.

It started getting scary for me, too, the further I got along. While I had an idea of what each debt was, I had never seen the number of them all together before. Worse, I had never seen the total of how much we were spending on interest. I knew that we didn’t have enough saved away to deal with an emergency, but the big picture made me realize we wouldn’t have been able to cope with it at all.

Why would anyone put themselves through this?

Because you can’t not put yourself through this.

My financial wellness check had several benefits for me. I had a lot to fix and I had to prioritize how I was going to fix it. Obviously, most of the debts would be taken care of with time. Many of the other problems didn’t have an obvious solution.

I decided to make it a priority to get an emergency savings fund together. We decided on a number that we were comfortable with and set up a plan to get there. We had two financial emergencies between November and December. We were prepared. They were taken care of and we were able to move on with our lives without taking on more debt.

We’re working on getting it back to where it was. Until then, I’m still sticking with the values I learned about myself by doing that financial wellness check.

If I truly value my time and my skills, and I’m willing to go to work and have someone pay me for that time and skill-set, then I damn well be sure I’m valuing the money I earn from it. Because that money provides my lifestyle. Because that money provides my security. Because my cocker spaniels are really happy when I’m responsible enough with my money so I can spare a few extra dollars for treats and bully sticks.