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Does it Pay for Adults to Return to Higher Education? (Part 2)

This is the conclusion of Walter Pearson’s series looking at the value of returning to higher education. To read the first part, please click here. In this article, Pearson explores the funding side of higher education and discusses the different ways adults can pay for their degree.

What does a college degree mean?

Completion of a college degree may help satisfy a requirement for hiring or promotion, and it does so because it signifies a number of qualities the candidate is likely to possess. A degree from a quality institution demonstrates the degree holder’s capacity to reason from facts and engage in thoughtful and clear writing, empathy for others, the ability to work cooperatively within diverse settings, an understanding of our place in a rapidly changing global context and analytic and quantitative reasoning. These are qualities employers are looking for — qualities our society needs. Employers are paying more for college graduates, even when a degree is not a formal requirement of the job. In the “Weathering the Economic Storm” study from Georgetown University, those holding a bachelor’s degree typically received 37 percent more in salary in low-education jobs than those with a high school education. Employers are paying a premium even when a degree is not required. The degree matters.

Is there any way I can reduce the cost of completing my degree?

Explore the least expensive options first.

My university is transfer-friendly and has a robust program that allows you to earn credit for the learning you’ve already gained through your work, travel and the things you are passionate about, such as hobbies and causes. These options (transfer, Prior Learning Assessment [PLA], College Level Examination Program [CLEP], and evaluated training) can save you thousands of dollars and several semesters. Explore all of these options with your college or university to help you reduce the cost and time to degree:

Maximize transfer credits.  Since the goal is to finish a bachelor’s degree, start by exploring community college transfer credits with the college where you want to finish.  Ask: How many credits can I bring in? Which courses will help me the most? Most bachelor’s degree programs typically allow about half of your credits to come from a regionally accredited two-year school, usually the local community college.

Check out prior learning assessment.  This is a well-established system for receiving credit for the learning you have gained from work and other experiences.

Try CLEP tests.  These nationally recognized exams from the College Board enable you to receive credit for a required course. With a bit of studying and a modest expense, CLEP tests can save you time and money. See if your training programs from the military or work might carry a credit recommendation from the American Council on Education.

Get your boss to pay for it.

Try to find a job where the employer provides tuition support. Many employers provide up to $5,250 a year in tuition support.

Go for all of the grant funds — too few apply!

Complete the Free Application for Federal Student Aid (FAFSA) and do it early each year. This helps you qualify for a Pell Grant (up to $5,550 per year) and may qualify you for additional state-granted funds. My home state of Illinois has a grant program that provides about $157 per credit. Any time you can find gift aid (that does not need to be re-paid), grab it.

I’m worried about repaying loans since my salary may be low when starting out.

The most important guideline is to borrow the minimum amount. Don’t borrow for living costs or things you don’t absolutely need; a new car or the latest gadget can wait. Scrimp and save.  Remember that you are investing in your future, not living for the moment. Unlike other forms of debt that can be erased in bankruptcy, you can’t walk away from student loan debt.

Check out this exciting new student loan option: Re-payments in proportion to income.

Under a new federal student loan program, you can repay in proportion to your income. Loan payments can be capped at 15 percent of discretionary income, which results in payments that are generally much lower than under the current system. To give an example, let’s say you’re making $30,000 a year after graduation and your loans total $17,000.  Since you are single, the government calculates that you would have a discretionary income of $13,225. Your payments would be 15 percent of that, or $165 per month. The payments would be lower if you had family obligations. There is a subsidy for interest accumulation over the first three years, and the loan goes away after 25 years, even if not fully repaid. This is a great deal, and I am very happy President Obama made it happen.

You may not have to pay all of it back: Public service loan forgiveness.

One of the most valuable new federal programs gives you loan forgiveness after 10 years of income-based payments. These terms will apply if you are working for any unit of the federal, state or local government. This also applies if you work for any non-profit organization that provides any of the following:

  • Public health services;
  • Public education or public library services;
  • School library and other school-based services;
  • Public interest law services;
  • Early childhood education; or
  • Public service for individuals with disabilities and the elderly.

This forgiveness program is combined with the new income-based payment system (see previous section) to make this a very attractive option.

Closing thoughts

Despite all of the recent skepticism, completing a bachelor’s degree pays off in helping you find and keep a job, and in how much you get paid. You have to be careful to choose the right college and the right major for you. Be smart and explore, with an admissions representative or academic advisor, all of the ways to bring down the cost of education. Apply for grants and seek employer support to help you with the costs. If you must borrow, be frugal and borrow only the minimum necessary. Work with the financial aid office to understand the great, new re-payment and forgiveness programs offered by the federal government. Make sure you approach the job market with the degree completed as well as the experience you already have in your chosen profession. Millions of adult students finish their degree each year. You can do it too. The key is to get started.