Financial Planning for Education: Tips and Strategies

One of the most effective ways to increase earning power is to take academic courses or earn a professional certificate. Formal education provides an opportunity to cultivate critical workplace skills, which can ultimately lead to more prestigious positions and more competitive salary ranges. However, as an old business saying goes, sometimes a person has to spend money before they can make money, something that certainly holds true with education. Academic education can be costly, and aspiring learners may have a bit of sticker shock when they see some initial tuition numbers.

The good news is that getting an education is not only a smart investment in the long run, but it can also be manageable in the short run through sound financial planning. Financial planning for education can not only lead to better budgeting and more judicious savings, but it may also involve finding resources that make education more affordable. Indeed, there are plenty of ways to finance your education, even when working a full-time job.

Types of Financial Aid for Education

One of the first things any aspiring learner should do is become familiar with the different types of financial aid that are available—from individual colleges and universities as well as from government agencies. Financial aid can be essential for saving on the cost of adult education, such as certificates. Consider just a few of the most common types of financial aid.

Grants

One of the most popular forms of financial aid is a grant. Learners who obtain grants are given money to help offset the costs of their education, with no expectation that they pay that money back. Of course, there are a few exceptions: learners have to repay their grant if they end up withdrawing from school or if they fail to fulfill any service stipulations attached to the grant.

There are a number of federal grants available, including well-known options like the Pell Grant as well as grants for those who have completed military service or who are willing to become teachers within certain public schooling programs.

Scholarships

A scholarship essentially provides “free” money that can be used to pay for an education. As with grants, there is usually no expectation that the scholarship be repaid, unless the learner withdraws from school or fails to meet certain academic criteria. Scholarships are offered by colleges and universities as well as nonprofit organizations and are often provided on the basis of academic, creative, or athletic merit. Scholarships can be crucial when it comes to financial planning for education.

Loans

Like grants and scholarships, loans can provide funding to help offset the expenses of education. The difference is that loans must be repaid over time, typically with interest. As such, when learners are offered financial aid packages by a college or university, they should always make note of whether their offering is classified as a scholarship or as a loan, as the difference can have long-term financial implications.

Learners should also note the difference between subsidized and unsubsidized loans. The former does not accrue interest, assuming the learner is enrolled in at least a half-time school schedule. However, unsubsidized loans do accrue interest, even while the learner is enrolled in classes.

Employee Benefits

Full-time employees can potentially receive financial aid opportunities from their employers. Tuition assistance is quickly becoming one of the most popular and common employee benefits, creating a tangible way for employers to invest in their employees’ ongoing personal and professional development. Learners who work for larger companies may want to inquire with the HR department about employee benefits. Common examples include:

• Tuition assistance
• Tuition reimbursement
• In-house training programs or conferences
• 529 college savings plans
• Financial assistance with travel costs associated with training and professional development
• Financial assistance with books and academic supplies

Note that, for tuition payments or reimbursements to be available to your employees tax-free, the education must be legally required for them to keep their current salary, status, or title. Or, it must help them develop or maintain skills that are directly applicable to their current job.

How to Find Financial Aid

Learners have a range of options to help with educational financial planning. However, what is the best way to locate scholarships, employee benefits, and other types of financial aid? Here are a few general guidelines for how to find financial aid.

Avoid Making Assumptions

All too often, prospective learners do not take the time to even apply for financial aid, simply assuming that they are ineligible due to lower grades, a lack of extracurricular achievements, or being in a high-income bracket.
With the sheer number of financial aid packages out there, most learners can qualify for some level of help. The only way to find out for sure is to apply—an undertaking that is time-consuming but usually worth it.

Consider Net Price

It is easy to be thrown off by education’s price tag and disregard the program altogether. However, the price tag initially offered is seldom the actual amount that learners are expected to pay. To make an informed decision, it is best to look at the price after subtracting financial aid coming from loans, grants, and scholarships.

Pay Attention to Different Types of Financial Aid

As noted above, financial aid comes in many different forms—some of which might have long-term financial implications. For example, a grant or scholarship seldom needs to be repaid but a loan does, with interest. This does not mean that loans are always ill-advised, but it does mean that learners must pay careful attention to the type of aid they are choosing.

Seek Employee Benefits

One of the most effective ways to pay for ongoing education is to ask an employer for assistance or reimbursement. Many HR departments already have these provisions budgeted. To persuade employers to underwrite ongoing education, it’s best to emphasize how additional skills formation will lead to greater productivity or efficiency.

Use Tools from the IRS

When applying for financial aid, most learners are required to complete a form called the FAFSA, which helps learners assess their eligibility for need-based financial aid. Filling out this form can be time-consuming, and any errors can adversely affect financial aid offerings. Fortunately, the Internal Revenue Service offers tools to help reduce filing times and increase accuracy. Specifically, the online Data Retrieval Tool will automatically provide financial data from the relevant tax returns.

Apply Early

Learners who want to learn how to find financial aid should understand how timing can be incredibly important. Many financial aid opportunities are awarded on a first-come, first-serve basis. As such, it often pays, quite literally, to apply sooner rather than later.

What Happens When There is Insufficient Financial Aid?

A critical part of financial planning for education is addressing all contingencies. For example, some learners may apply for financial aid from the college or university of their choice and wind up disappointed when the financial aid they are offered is far less than expected.
This is no reason for panic. Instead, there are several steps learners can take to augment a less-than-anticipated financial aid offering.

Pay Early

Often, making early or all-at-once tuition payments can decrease the total amount owed. This may not be an option for every employee, but seeking early payment options can usually result in a lower educational cost overall.

Seek Part-Time Work

This may not be viable for learners who already work long hours, but part-time jobs or work-study programs can be a great way to offset the costs of education. Note that entry-level jobs and paid internships are also crucial for helping learners gain professional experience.

Ask About Payment Plans

While some schools will expect tuition to be paid in full before the start of a semester, others may be more lenient. Ask about payment plans that allow the full cost of tuition to be spread out over the course of several weeks or months, providing some flexibility throughout the semester. One of the most popular types of payment plans is to segment annual tuition into 12 smaller portions, allowing more manageable payments to be made each month.

Request a Reevaluation

It is possible that the financial aid department made an error, misjudging a learner’s true financial circumstance based on inaccurate or out-of-date tax documents, for example. Learners can always appeal their financial aid evaluation, citing specific circumstances—such as changes in their job situation.

Look into Private Loans

Some banks and credit unions offer private loans that can be put toward an education, without any requirement for you to fill out the FAFSA. While these loans are usually not as advantageous as financial aid directly from the school, they are still worth looking into if financial aid comes up short.

How to Create a Financial Plan for Education

In addition to seeking financial aid, it is also important for learners to have a basic financial plan in place, guiding their spending and saving habits throughout college or university. Here are a few guidelines for how to create a financial plan.

Start with Net Income

It is impossible to create a working budget or a viable financial plan without having some idea of the money brought in each month. This includes money from any part-time or full-time work, as well as monthly distributions from a grant or another type of financial aid. When it comes to financial planning for education, starting with net income—income after taxes—is always a good idea.

Create a List of Monthly Expenses

Net income goes hand in hand with monthly expenses. Of course, the particular expenses will vary from one person to the next, but some of the most common monthly expenses for learners to consider include:

• School supplies, including textbooks
• Housing (rent for an apartment, dorm, or house; or for some learners, mortgage payments on a house)
• Groceries and dining
• Phone and internet expenses
• Gas and travel costs, particularly if commuting to campus each day (earning an online certificate can make a significant difference here)
• Monthly payments for school loans
• Insurance
• Gym memberships

It might also be wise to budget for monthly contributions to a savings account, when possible.

Separate Expenses into Fixed and Variable

The next step in how to create a financial plan is understanding how expenses may be classified. Expenses can be labeled as either fixed or variable.

• Fixed expenses are the things that must be paid every month and cannot be avoided. Examples include housing, groceries, gas, and insurance costs.
• Variable expenses may have a little more flexibility and in some cases can be cut out of the financial plan altogether. Gym memberships and dining out fall under this umbrella.

Identifying variable expenses can potentially suggest ways to make education more affordable, even if it means temporarily sacrificing entertainment expenses and eating out, or working out at home instead of at the gym.

Assess the Value of Financial Aid

Having a clear sense of net income and both fixed and variable expenses furnishes some clarity about how much financial aid is needed and how financial aid can best be put to use. For example, in some cases, the most valuable form of financial aid might be housing assistance or one-time grants that can offset the costs of books, electronics, and other supplies.

Common Myths About Adult Education Finance

In financial planning for education, it is critical to work with accurate and up-to-date information. In fact, misconceptions about paying for school can be quite costly in the long run. Here are a few examples of adult education finance myths that can prove damaging.

Myth: Financial Aid is Based Mostly on Grades

While academic excellence can certainly help, the reality is that it determines how much financial aid prospective learners can get. Higher education institutions also take into account a learner’s extracurricular activities and financial needs. In fact, need-based financial aid is becoming more common and may be good options for learners who are in a low-income bracket or who have extenuating personal circumstances, such as obligations to financially support children or an aging parent.

Myth: Independent Foundations Can Offset Educational Costs

While independent foundations and nonprofits are often good places to turn for supplemental financial aid, it should never be assumed that these organizations will be able to offer a “full ride,” especially to a more expensive school. Be careful when committing to a school without first having a clear sense of how to pay for it.

Myth: Online Education Isn’t as Respected as In-Person Education

Another common myth is that earning an online education is less respected than being educated on campus. In this era of remote work and hybrid office spaces, digital communication is widely respected, and that goes for education, too. Pursuing online education can be a flexible and affordable alternative to on campus enrollment.

Find Out More About Financial Planning for Education

The bottom line is that paying for education can be expensive on the front end, but the long-term career benefits may make it totally worthwhile. Additionally, there are many ways to offset the cost of education, specifically through sound financial planning.

Consider these steps while pursuing a professional certificate from Suffolk University’s Center for Continuing & Professional Education (CCPE). These online programs can be cost-effective, flexible solutions for learners with other obligations. Explore how to maximize your professional opportunities with Suffolk’s CCPE.

Recommended Readings

Certificate vs. Certification: What Is the Difference?
Why Should You Earn an Online Certificate?
Continuing Education: Definition and Career Benefits

Sources:

CNBC, “5 Budgeting Tips for College Students”
Forbes, “College Payment Plans: An Alternative To Student Loans”
Investopedia, “How to Ask Your Employer to Fund Your Education”
Money, “4 Myths About College Scholarships That Could Cost You”
PeopleKeep, “Education Benefits You Should Be Offering”
StudentAid.gov, 7 Options if You Didn’t Receive Enough Financial Aid
StudentAid.gov, Types of Financial Aid: Loans, Grants, and Work-Study Programs
Wolters Kluwer, “Furthering Your Employees’ Education is Good for Business”