Should Older Students Max Out Financial Aid?

Should Older Students Max Out Financial Aid?
  • Opening Intro -

    Should older students max out financial aid? Or pay as much as possible out of pocket?

    For students returning to college later in life (or enrolling for the first time), much of the conventional financial advice for college students doesn't apply.

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Should older students max out financial aid? Or pay as much as possible out of pocket?

For students returning to college later in life (or enrolling for the first time), much of the conventional financial advice for college students doesn’t apply.

Younger college students are generally advised to live off campus (with their families if possible) to save money, learn how to cook for themselves, and leverage high GPAs or college entrance exam test scores to get as many scholarships as possible — maybe even pick up a part time job if they can handle it alongside schoolwork.

Students that are more advanced in years however don’t have the ability to follow this kind of advice. You’re working full time, maybe even supporting a family, and you’ve got bills to pay. In such a situation, it can be tempting to take out all the student loans you can get your hands on to get through your schooling with as little immediate impact on your finances as possible.

Below, we’ll explore what situations that’s a good idea in and what situations it isn’t.

SITUATION ONE: YOU WILL BE MAKING SIGNIFICANTLY MORE MONEY AFTER YOU GRADUATE

In the case that you will be making a significantly higher income after you graduate (especially if money is tight and you have minimal savings when entering school), it MIGHT be okay to take full advantage of the student loans available to you.

It’s important to take job availability into account, however (checking the Bureau of Labor Statistics website at www.bls.gov if you’re in the United States is a good way to look into employment prospects in your chosen field) as well as keeping in mind that you have to start repaying your loans within six months of graduation.

It’s most likely a good idea to put back six months’ living expenses while you’re in school to hold you over while searching for a job in your degree field.

SITUATION TWO: YOU’RE ENTERING COLLEGE WITH LOTS OF HIGH INTEREST DEBT

If you’re under a large amount of high interest debt at the time that you’re entering or returning to school, it may be in your best interest to leverage student loans to pay for your education while focusing as much of your income on paying down your higher interest debt while you’re in school (especially if you qualify for subsidized loans where the government pays the interest for you while you’re enrolled in school).

If you’re considering private loans to finance your education, however, make sure the interest rate is 1) lower than the interest on the debt you already have and 2) fixed rate rather than variable — the last thing you want is for your interest rate to climb significantly and wind up costing you more in the long run.

MOST OTHER SITUATIONS

In almost any situation aside from the ones detailed above, financing as much as your education out of pocket as possible is in your best interest.

While using student loans to finance your education so you can enjoy your current lifestyle when returning to school may be tempting, taking on large amounts of debt for little reason other than short term comfort isn’t a smart financial decision and should be avoided. You will thank yourself later for avoiding the pitfalls of student debt.

Do you know others who may be considering returning to school as adults? If you benefited from the tips in this article, share the knowledge to share the wealth!

College Financing reference:

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Last update on 2017-10-16 / Affiliate links / Images from Amazon Product Advertising API

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