By Julie Jaggernath
If you’re a mature student looking to return to school, finding ways to pay your tuition and education costs may seem like a daunting task. Couple the increased costs with a decrease in income, and many people stop before they even get started. Before listing off 11 of the best tips about how to pay for school, consider test driving a student budget to see if you can avoid going deep into debt with a return to school.
How to Test Drive a Student Budget
While it can be easy to focus on the cost of a program, be realistic about all of the costs as you consider your options, e.g. books, supplies, transportation, decreased earnings, and extra child care/activities. Then, well before going back to school, test drive your budget by living on the revised version to see what it will be like. By trying it out ahead of time you’ll either be better prepared for the changes you’ll face, or you’ll have enough time to come up with an alternate plan.
Tip #1: Sticking With a Field You Know Can Reduce Expenses
If you’re returning to school because you’re working in a field you’d rather not stay in, don’t discount it entirely. Your knowledge is transferable and could provide you with opportunities for a blended new career that you didn’t know existed.
Building on credentials, experience, or a degree you already have can save you precious time and money. Some post secondary programs will give you credit for past education and/or experience. Adding to your education also allows you to draw on your experiences and take advantage of what interests you, which will make going back to school easier.
Tip #2: Look for Free Upgrading Courses
If you need specific prerequisites, check into free upgrading courses through your local school district; many offer courses at no charge for graduated high school students of any age. If the courses you need aren’t available through the school district, you might need to take adult education courses at a public post secondary institution. There you will need to pay tuition but some upgrading courses could be available at a reduced rate.
Tip #3: Use Income Tax Refund Money to Pay for School
There are some tax credits available for tuition costs, and you can find out more from CRA about tuition, education and textbook amounts. Along with other ways to reduce how much income tax you pay and increase the size of your refund, e.g. with RRSP contributions, you may receive a refund that is big enough to help offset some of the costs of returning to school.
Case in Point: Should Darren Pay Off Student Loans or Save?
Tip #4: Take Advantage of Benefits Through Your Work
Your benefits package at work might include help with tuition and/or education costs when going back to school. Check into your extended benefits package or talk to your HR department to see if you have benefits available and/or if you qualify for them. While some employers will stipulate that courses must be related to your work, others won’t.
Tip #5: Apply for Canada Student Grants
If you are a low or middle-income student who has been out of high school for at least 10 years, there are federal grants available to help top up the funds you need to return to school. Check out the expanded eligibility for the Canada Student Grant program. It’s designed to help students returning to both full or part time studies, with or without dependents. There are also grants for students with permanent disabilities, both for tuition and to help pay for education-related costs.
Tip #6: Spread Out Your Tuition Payments Whenever Possible
As you consider how you want to further your education, look at when payments are due and if you can work even part time while attending courses. Unless you go back to school for a specific program, taking courses towards a degree or certificate allows you to pay-as-you-go. Even when you apply to a specific program, there is often a payment schedule that allows you to spread out your costs. If you’re looking at a program that seems to want payment in full up front, ask if there’s some way to break up that one big payment, but importantly, also ensure that you will get what you pay for.
A great place to get help with funding options to pay for going back to school is the financial aid and awards department at the institution you’re applying to. Options for mature students are often slightly different than for students fresh out of high school, so be sure to explain your situation to get the best advice.
Tip #7: Apply for Scholarships and Bursaries
Scholarships and bursaries/grants are money that you do not have to repay at the end of your studies. The catch, however, is that you must apply to get it. It is usually well worth your time to fill out the applications and write the short essays because much of this “free” money goes unclaimed each your because no one applied for it. Funding is important for all students, not just first year students, and many mature students don’t realize that they too can and should apply for awards.
Tip #8: There are 2 Kinds of Student Loans
Student loans, regardless of the source, with few exceptions must be repaid. There are two types of student loans – government (provincial and federal) and private (funding from elsewhere, e.g. your financial institution). If you qualify for government student loans, they do not require payments while you’re in school and when it comes to repayment, the term can be 10 years or more and the interest is tax deductible.
Student loans or lines of credit through your bank or credit union typically require interest-only payments while you’re in school, and to qualify, you may need a co-signer or collateral. Repayment terms tend to be stricter and interest is not tax deductible.
To find out more about student loans, connect with your post secondary institution of choice. They will be able to give you the most up-to-date information. They will also be able to give you information about loans that do not need to be repaid. There are a limited number of arrangements where working in the field can reduce your loan amount, and these change based on demand and economic factors. If you are a student with a disability, there may be some special considerations available to you as well.
Tip #9: Using Your Savings to Pay for School
If you have savings in a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP), you may want to consider using some of the money to help pay for your education. The Lifelong Learning Plan (LLP) allows you to withdraw money from your RRSP to help finance full-time training or education for yourself or your spouse.
When withdrawing money from long-term savings, consider all of your options, tax consequences, and any requirements for/conditions of repayment carefully. How much you take out can impact future goals, e.g. when you retire and with how much income/savings, and negate some of the positive effects of compound interest. However, your considerations should also include how your future earning potential will impact your ability to replace the funds you withdrew, along with a contingency plan if you run into problems and your goals get off track. Depending on your situation you may want to seek guidance from your tax professional.
Tip #10: With Permission, You Could Collect EI (Employment Insurance) While Taking Training
Typically, when you collect EI, you must be available to return to work if offered a job. However, under a recently expanded program you may be eligible to keep receiving EI benefits while attending a full-time program. While you must pay for your education yourself, EI could help pay for rent, groceries, or other essentials. Check with Service Canada for all of the details and to see if you qualify to take advantage of this EI education program benefit.
Tip #11: Count Your Education Costs Into Your Parents’ Estate Planning
Many parents decide that they will leave a legacy, in the form of an inheritance, to their surviving children. As appreciated as the inheritance is, no matter when it comes, many recipients could have put the money to especially good uses if they had received it sooner. Without jeopardizing their own needs and well-being, are your parents in a position to part with some of their money now so that you could use it to pay for school?
Be candid with your parents about your plans to go back to school and talk about all of the different ways you could fund your added education. If you’re not sure how to include the estate planning piece in your conversations, you could start by showing them this article. Not only will it will hopefully open the door and make a discussion easier, it could get your parents thinking about other ways to help you and your family once you’re back to school, e.g. child care, making meals, or running errands for you.
Finding the Money to Further Your Education
The long-term benefits of furthering your education might feel like the proverbial light at the end of the tunnel, especially as you think about all the financial hurdles you’ll have to jump over to get there. Within your bigger goals, plan in short-term increments – you could save up and take one course at a time to get back into the swing of going to school. Whether it’s for a trades or technical program, or college or university, going back to school is a really big deal. Make it feel less ominous and more realistic by going easy on yourself as you adjust to being a student again.