How to Pay for Grad School While Working Full-Time
Have you considered studying for an advanced degree while continuing to work full-time? Grad school can be an opportunity to gain new skills, improve earning potential, and open up new job opportunities. But for many professionals, leaving the workforce to study full-time is an expensive commitment.
Tuition can be costly on its own. When you factor in a loss of income and years of experience, it’s hard to justify leaving a job to attend grad school.
Luckily, you don’t have to put your salary on hold to further your education.
Before you commit your hard-earned cash, make sure you follow these tips for a debt-free degree.
Choose a Program You Can Afford
The first step to paying for grad school is researching your options. You’ll be surprised at how much the same degree can cost at two different schools. When I was looking into online MBA programs, the average private school tuition was around $90,000. The same course load at nearby public schools was about $30,000–up to 3 times cheaper!
Most accredited colleges offer a similar quality of education and excellent professors, regardless of price. Therefore, if your primary goal is to gain new knowledge and skills, it’s likely that the less expensive school is a better option for you.
Conversely, if you are concerned with school reputation, consider the value you will gain from the investment. It is possible that having access to an elite alumni network and a “name-brand” degree on your resume will enhance your future employment options.
With an online degree program, you will be less likely to make personal connections while obtaining your degree. Interacting with classmates in a virtual setting makes it harder to form long-lasting relationships. This factor makes a less expensive degree more attractive for online programs.
While analyzing your options, be sure to look at the number of courses that are required for degree completion. This will affect the overall cost of the program, and the time it will take you to complete it.
Time is money, so weigh your options carefully!
Consider Degree Impact on Earning Potential
Determining the payback period for your degree can help you decide if it is worth the cost. In the example below, School 2 is more expensive than School 1 but offers a higher salary upon completion of the program. It would take longer to earn back the money spent on the degree if the student chose School 2.
However, the student should also consider the long-term value of the investment — even though School 2 has a longer payback period, it might continue to earn more money over the student’s lifetime. If the student kept the same income for the next 20 years, attending School 2 would provide $400,000 more.
A big reward for the up-front investment!
In many industries, earning an advanced degree is not guaranteed to result in a raise. Do some research on websites like Glassdoor or PayScale and talk to people in your field to determine how the degree will impact your income.
(Tip: PayScale has a feature that can estimate your potential income if certain factors are changed, such as education and years of experience.)
Utilize Tuition Reimbursement
One advantage of working full time while studying is that many employers offer tuition reimbursement. Take a look at your company’s HR policy and find out if you qualify.
If you are in the market for a new job, tuition reimbursement could be a factor that you consider in the benefits package.
Make sure you thoroughly read and understand the terms of your company’s policy. The following are aspects to be aware of if you are going to utilize tuition reimbursement:
- Policy coverage. In addition to tuition, grad school often comes with payments for books, fees, applications, school supplies, test scores, a laptop, and more.
- The monetary limit on the reimbursement policy, and when it would max out (each school year, calendar year, or fiscal year).
- If you will receive the funds before or after the start of each class
- Requirements for the grades you need to receive in your courses and any requirements for your performance management score at work.
- Whether or not you will owe money back if you choose to leave the company.
- Tax implications. Can you deduct tuition payments? Will the money provided to you from your employer count as taxable income? (In 2020, any payments from your employer over $5,250 count as federal taxable income.)
Tuition reimbursement can be an incredible resource to obtain a low-cost degree while working full time. Make sure you fully understand how it works.
Establish a Sinking Fund to Save for College Expenses
Once you have been accepted to a program, it’s time to pay for it. This strategy will make it as painless as possible.
Start by estimating how much your courses will cost every year (recalculate each year if things change). Add up the cost of tuition, fees, books, and supplies for the year. Then, subtract the amount that your employer will reimburse.
Take this number and divide it by the number of paychecks you receive in a year. That will tell you how much money you need to set aside from each paycheck to afford the classes.
If you absolutely cannot afford to save this amount per paycheck, you may need to take out a student loan. This is a cause to reconsider the value of the degree — is it really worth going into debt? Debt adds interest payments, increases risk, and reduces future flexibility in your budget.
Once you know how much you need to save per paycheck, establish a place to keep the money that you will not be likely to touch it. Open up a new savings account or a “bucket” to set aside the funds. Set up an automatic transfer to send the required amount to this account every time you get paid.
With this method, you have established a “sinking fund” to save for college expenses. You might need to initially add some cash into the account to cover up-front costs, but then it should continue to accrue the money that you need to cover your payments while you are in school. Every few months, re-evaluate to make sure you are saving enough money, and this account is fully funded.
And that’s it! A simple way to cash-flow your college expenses.
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