As the financial fallout from the coronavirus pandemic continues, people with unexpected changes in income might look to higher education to set themselves up for a successful career transition. Technical training and other educational programs are attractive to nontraditional students as a way to bolster long-term job opportunities and financial health.
Research shows that enrollment rates among older students rise in periods of economic decline, such as during the Great Recession, when college enrollment among nontraditional students increased during and after the 2008 downturn.
Nontraditional students are often older learners going back to finish a degree, working adults who have been laid off or furloughed, or those who seek a career transition to an in-demand job that offers more competitive compensation.
These students typically juggle the demands that come with families and/or full-time jobs along with their studies. As such, they tend to enroll part time as a way to balance their responsibilities.
Given these realities, nontraditional students need to be careful when making decisions about college debt and should avoid the following common traps when weighing whether to borrow student loans and, if so, how much.
An Incomplete Picture of Total Costs
As a first step, get a realistic picture of the full costs you face as a nontraditional student. While it is expensive to pay for tuition, nontraditional students typically must factor in costs of transportation, parking, lab fees, textbooks, supplies and the potential costs of purchasing a new laptop or other device.
Getting a handle on the full financial commitment is critical when determining the amount of student debt to take on in order to reduce the risk of borrowing too much and possibly facing student loan default due to missed payments.
Competing Financial Priorities
Nontraditional students usually manage a more complex financial situation than an average 18-year-old high school graduate. Nontraditional students are more likely to juggle family and household responsibilities and manage debt like a mortgage or other loans, so they must prioritize those financial goals against the challenges of funding higher education. Paying for child care is also a factor.
Budgeting for the right balance is the best option you can take when starting or returning to college and using student loans to help pay for it. Part of the balancing act is also factoring in the costs of any emergencies that might come up during schooling.
Students who don’t complete their degree are far more likely to default on their student loans. That means their credit rating will take a hit and they could face wage and tax refund garnishment. To top it off, these borrowers never realize the benefits of a degree.
A good approach is to consider the long-term commitment needed to succeed at school and build in safeguards to help ensure successful completion. For example, if you are employed, explore whether your company provides student loan reimbursement or repayment benefits, which can reduce educational debt you might incur.
Overdependence on Student Loans
Due to their age and income, many nontraditional students do not qualify for the grant and scholarship aid available to traditional students. This means a greater dependence on federal and possibly even private loans to pay the cost of tuition and other expenses.
Student loan origination fees will also have an impact on one’s budget, so it’s wise to understand and factor in those costs, too.
A nontraditional student’s best strategy is to take on only an amount of student loan debt that can be comfortably repaid. To do that, it may be wise to pace out coursework over a longer period of time to pay more out of pocket or through sources of aid that don’t have to be repaid, thus minimizing the amount in student loans required.
Neglecting Planning for Retirement
Making student loan payments as a 22-year-old recent graduate is very different from shelling out monthly payments as a 45-year-old hoping to retire in 20 years.
Consider budgeting for student loan payments based on the assumption that your salary does not increase as a result of your college experience. Student loans will be due and payable regardless of whether there are salary increases down the line, and building in a buffer helps reduce financial stress.
Going back to school might present obstacles as a nontraditional student, including managing student loan debt. Although it’s a substantial financial investment, it is one that will pay off in the long term for those who understand the potential traps and act to avoid them.
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5 Student Loan Traps for Nontraditional Students to Avoid originally appeared on usnews.com