Financial considerations for adults mulling a return to school

As the economy has struggled, many adults have found themselves heading back to school. Mass layoffs contributed to high unemployment rates and left many adults without work wondering if going back to school is a good way to weather the storm and, once that storm is over, stand out among a crowded pool of job seekers.

In 2009, 100 community colleges were surveyed by the American Association of Community Colleges, which, based on the survey, reported that community college enrollment had increased from 2 percent to 27 percent in just a year's time. Displaced workers played a significant role in that spike in enrollment, as men and women who lost their jobs increasingly decided to find a new career path that might offer more security.

Though the economy has slowly started to recover, many adults are still considering a return to school. Of course, school can be expensive, and it helps to explore your financial options when mulling a return to school.

Where will the money come from?

Determining the cost of graduate school is not easy, as tuition varies greatly depending on a student's course of study. Public graduate schools are typically more affordable than private schools, but tuition will be expensive regardless of the university. Even adults who don't want to pursue a graduate degree but a new field of study entirely should expect tuition to be substantially higher than it was when they were students years ago.

That said, adults must decide from where the money for their continued education is going to come. Paying out of your own pocket will require some sacrifices in other areas of your life and could also deplete your personal savings. Financial aid, grants and private loans are other options, and each of these should be thoroughly explored before making a final decision.

Will your employer help pay?

For those men and women who are still employed and want to continue their careers, it's quite possible your employer will help pay your tuition. Employer-funded tuition programs might earn your employer a tax deduction, so don't just assume your employer won't help cover some of the bill for your education. Some employers who help pay their employee's tuition will ask an employee to commit to the company for a certain number of years after they have earned their degree, while others will only provide assistance to employees who are not training for another career.

Can I go directly to the bank?

Not all adults returning to school will qualify for financial aid (though all adults who can't afford to pay out of pocket should still apply), while others will not qualify for enough financial aid to cover the costs of their education. In such instances, you can go directly to the bank and apply for a private loan. Adults with strong credit histories should not have too much trouble securing private loans. However, loans from private lenders almost always come with higher interest rates than government loans.

Should I tap into my retirement savings?

Tapping into retirement savings to pay for your education is a potentially costly maneuver. In addition to substantially reducing your nest egg, withdrawing money from a retirement account might incur penalties and taxes. What's more, if your retirement account has tax-deferred growth, then you'll be missing out on potentially significant earnings once you remove money from the account. It's typically a bad idea to tap into your retirement savings until you're actually retiring, so resist the temptation to do so when establishing your plan to pay for continuing your education.

Thanks to the recession, many adults have returned to school to counter a layoff or advance a stagnated career. Before making such a decision, explore if it is financially prudent.