Posted by the Asbury Park Press on 10/8/06

GANNETT NEWS SERVICE

College: It's not just for kids anymore.

More than one-third of the students enrolled in higher-education programs are older than 24. That proportion could rise as the population ages and more Americans return to school either to hone job skills or to pursue areas of personal enrichment.

But anyone who heads back to the classroom after a lengthy break faces sacrifices, in terms of both time and cash flow.

"You have to be cognizant of how much money you have," said Louis Barkan, a 36-year-old, full-time MBA student in the W.P. Carey program at Arizona State University.

Different from teenagers

The financial challenges for returning adult students are somewhat different from those of wide-eyed freshmen entering straight from high school.

On the one hand, older adults could have several thousand dollars already saved up for college and might still draw a salary from a full-time job.

In fact, 91 percent of adult-student respondents in a U.S. Department of Education survey said they received some type of financial support from their employers, with cost reimbursements the most common response.

"A lot of employers have reimbursement plans," said April Osborn, executive director of the Arizona Commission for Postsecondary Education. "You may even want to choose our employer based on that."

On the other hand, scholarship money is less available for graduates than undergraduates. In addition, returning adult students often have mortgages, child-care expenses and other costs that freshmen usually don't face. Also, the possible need to go on a budget after years of relatively carefree spending can be a problem for returning students.

What this means is many returning students must borrow to meet their college costs.

"I don't see a lot of people paying cash," said Michelle Weber, interim financial aid manager at the W.P. Carey MBA program at ASU.

Rules for grad students

Graduate students can borrow up to $18,500 a year on federal Stafford loans, which carry a relatively low interest rate of 6.8 percent, Weber said. For those who need extra cash, it's available through the new Graduate Plus Loan, which debuted in July but carries higher interest rates than Staffords.

Barkan, who spent more than a decade working in the film industry and then in his family's business before returning to school, is relying mainly on Stafford loans to finance his degree, supplemented with income from a part-time graduate assistant job this academic year.

"I'm very comfortable with (borrowing)," said Barkan, who hopes to pursue a career in interactive marketing.

Stafford loans, he noted, carry modest interest rates, are easy to obtain and can be paid back over fairly lengthy spans of 10 years or more.

"The bottom line is, the value of the education will outweigh the costs," Barkan said.

As another option, consider a Roth IRA if you're currently working. Money reflecting your original contributions can be withdrawn tax-free at any time. Earnings can be tapped tax-free if the account has been held for at least five years, though other conditions apply.

Roll into retirement

If you decide not to spend the money on college after all, it can stay in the Roth for its intended purpose: retirement.

The situation with money pulled from 401(k) plans is trickier. If you borrow from a 401(k) account, you won't pay taxes on the loan but must repay it. But 401(k) withdrawals are taxable, even if used for college, and a 10 percent penalty applies for borrowers younger than 59 years, six months, said Bob Scharin, a senior tax analyst at researcher RIA in New York City.

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