Going back to school to boost your earnings potential is understandably scary, especially if you have all the financial obligations that typically go along with being an adult. But you’ll be far from alone if you take the plunge. According to the National Center for Education Statistics, 7.5 million students enrolled in U.S. colleges and universities in 2020 were 25 or older. That’s nearly 40% of all college students.
Whether it’s worth the leap financially depends on individual circumstances, but a 2019 study by the Federal Reserve Bank of New York found that the average rate of return for a bachelor’s degree was about 14%, compared with a long-term return of 7% for stocks and 3% for bonds. The average salary for someone with a bachelor’s degree was $78,000, compared to $45,000 for someone with only a high school diploma.
The biggest obstacle to post-high school training for most people is cost. The truth is, non-traditional students have access to most of the same resources to pay for school as someone coming straight out of high school. But if you’re already in a career, you might have an advantage: your employer.
Many companies offer tuition reimbursement, scholarships or repayment assistance for student loans. Employers can offer an employee up to $5,250 in educational assistance annually that won’t count as income on your individual tax return. Educational expenses you incur can, under certain circumstances, be eligible for a tax credit or deduction. Ask your employer or admissions offices for tax tips associated with going back to school.
Besides figuring out how to pay for your return to school, it’s important to keep up with other areas of your financial life. Don’t rob your emergency fund or your retirement savings to go back to school.