I went back to school in my late 20s as a “mature” student. To tackle the massive costs of my masters in business program, which amounted to $75,000, I used a combination of scholarships, a line of credit and, because I still worked full-time throughout my program, I paid the difference using my regular cash-flow.
Heading back to school is exciting because it typically means you’ll be pivoting towards something better for your career, finances and personal satisfaction. But, if the thought of paying tuition is giving you heartburn, it’s time to look at the best options to afford the costs, not including student loans through the federal and provincial governments.
Lifelong Learning Plan
The Lifelong Learning Plan (LLP) allows you to withdraw up to $20,000 from your RRSPs to finance training or education for you, your spouse, or your common-law partner. The best part of this is that you won’t get slapped with a tax penalty for the withdrawal, whereas if you withdraw money from your RRSP before retirement to pay for a trip or a car, the withdrawal is considered income in the year you received the funds. You’ll end up paying hefty taxes.
Your annual withdrawal limit is $10,000. You’ll have 10 years to repay the funds and once they’re replenished, you can participate in the plan again, as it is unlimited lifetime participation.
Check out the Canada Revenue Agency website for more information.
Scholarships aren’t just for new post-secondary students in their late teens or early 20s. In fact, there’s even more money available for mature students. Start scanning for awards that are applicable to your area of study and geography.
Some of my favourite aggregate databases are Scholarships Canada, Yconic, Universities Canada, Scholarship Portal and FindMyScholarships.com. You can also check in with your employer to see if they have scholarships.
There’s so much money that doesn’t get applied for every year — literally millions of dollars, according to Scholarships Canada. So, apply! I did it and managed to cover just over 30 per cent of my costs.
Student lines of credit
Canada’s major financial institutions offer student lines of credit with preferential interest rates. This option is debt that you must pay interest on, but it offers the flexibility of taking out the money you need at exactly the right time. Typically, you’ll then have to start repaying the principal balance within six months of graduation.
Pay-as-you-go through savings
Plenty of people work full or part-time while they return to school. If this is you, you’re the perfect candidate to digitize a bi-weekly transfer into your high-interest savings account from your chequing on payday. This will allow you to build up savings that you can then use to pay your tuition and books as these expenses come up. This option won’t likely cover every cost, but you can complement it with one of the other options above.
I know that the opportunity cost of heading back to school as an adult is high because it can mean forgoing full-time income for a few years while retooling for your future career. But, the journey is worth the work and money if it results in a better career.
Because I invested in myself, I broadened my network, unearthed my professional calling and subsequently boosted my income by starting my business.
Lesley-Anne Scorgie is a personal finance author and founder of MeVest.ca