No more company-funded tuition reimbursement, how to afford grad school?
March 13, 2009 10:42 AM Subscribe
Company was paying for grad school, but had to cut back. I can't put off finishing my degree, but I can't afford the out of pocket expenses either. They also cut back on my 401k. I'm considering a lot of options but none of them seem pretty. What should I do?
I just got word that across the board at my company, salaries are being cut 5%, 401k matching is being suspended, and the tuition reimbursement program is being "scaled back", which apparently means they'll only approve one more course for reimbursement for the rest of the year. Given the economic climate, I highly doubt these cuts will be reversed when they re-evaluate in December, and they may even get worse.
I am currently contributing (what used to be) the max for matching funds to my 401k, and am in grad school 2 nights per week earning an MBA, which my company has been reimbursing me for. The classes for this program are approx $2000 each (give or take a little depending on whether you count fees and textbooks), and my plan was to take 4 more classes this year and 4 next year, which would complete my degree. I've been working really hard to try to get my degree done as soon as possible, and for a number of reaosns, putting off classes isn't an option. I also don't have $14k lying around (my emergency fund is somewhat depleted as it is due to a recent large purchase that I chose not to finance, and I can't be sure I won't be laid off next time the cost-cutting measures come around). Saving for tuition will be much harder with the 5% decrease. There are areas I could cut back on, but not enough to save the amount I need. At the same time, I'm concerned about neglecting my 401k... I was planning to start contributing to a Roth IRA soon in addition to my 401k contributions (which I think is even more important now that the matching is gone), but with the tuition and 5% decrease, I'm not sure there will be any money left over to contribute!
I'm considering several options, including doing some freelance work, finding grants/scholarships, and/or student loans. I want to avoid loans if I can, but freelance work takes time (and between the job and school, time is tight as it is), and grants or scholarships seem to be much harder to find for graduate degrees. Do you have any suggestions for what else I could be doing to get through my degree while not neglecting retirement savings or going insane?
I just got word that across the board at my company, salaries are being cut 5%, 401k matching is being suspended, and the tuition reimbursement program is being "scaled back", which apparently means they'll only approve one more course for reimbursement for the rest of the year. Given the economic climate, I highly doubt these cuts will be reversed when they re-evaluate in December, and they may even get worse.
I am currently contributing (what used to be) the max for matching funds to my 401k, and am in grad school 2 nights per week earning an MBA, which my company has been reimbursing me for. The classes for this program are approx $2000 each (give or take a little depending on whether you count fees and textbooks), and my plan was to take 4 more classes this year and 4 next year, which would complete my degree. I've been working really hard to try to get my degree done as soon as possible, and for a number of reaosns, putting off classes isn't an option. I also don't have $14k lying around (my emergency fund is somewhat depleted as it is due to a recent large purchase that I chose not to finance, and I can't be sure I won't be laid off next time the cost-cutting measures come around). Saving for tuition will be much harder with the 5% decrease. There are areas I could cut back on, but not enough to save the amount I need. At the same time, I'm concerned about neglecting my 401k... I was planning to start contributing to a Roth IRA soon in addition to my 401k contributions (which I think is even more important now that the matching is gone), but with the tuition and 5% decrease, I'm not sure there will be any money left over to contribute!
I'm considering several options, including doing some freelance work, finding grants/scholarships, and/or student loans. I want to avoid loans if I can, but freelance work takes time (and between the job and school, time is tight as it is), and grants or scholarships seem to be much harder to find for graduate degrees. Do you have any suggestions for what else I could be doing to get through my degree while not neglecting retirement savings or going insane?
If you haven't already, definitely go fill out a FAFSA as soon as you can. That might get you some scholarships/grants, and will introduce you to the loans that are subsidized by the federal government so that they don't accrue interest while you're in school. I was able to get some grants/scholarships through the state of CA, but you still need to check with your school, as wfrgms said, about what they can offer you.
posted by so_gracefully at 10:57 AM on March 13, 2009
posted by so_gracefully at 10:57 AM on March 13, 2009
$14k in student loans is coming in way under the average amount for an MBA, which according to this page is $35,525. The typical rates are low right now, you get ten years to pay your loans back, and there are all sorts of options for delaying payment in case of any hardships. Your worst case scenario is a pretty manageable one.
posted by dosterm at 11:03 AM on March 13, 2009
posted by dosterm at 11:03 AM on March 13, 2009
the tuition reimbursement program is being "scaled back", which apparently means they'll only approve one more course for reimbursement for the rest of the year
Before you spend too much time worrying, I'd confirm what exactly your company has decided to do about tuition reimbursement. It sounds like you've only heard through the grapevine, or maybe the exact policy hasn't been determined yet.
If in fact what you heard is true, I would do as others suggested, meeting with your school's financial aid office and filling out the FAFSA. Actually, the FAFSA you might want to check into right away, since there is a deadline for getting access to certain pots of money. It's been a long time since I filled one out, though, so things may have changed. Good luck.
posted by JenMarie at 11:47 AM on March 13, 2009
Before you spend too much time worrying, I'd confirm what exactly your company has decided to do about tuition reimbursement. It sounds like you've only heard through the grapevine, or maybe the exact policy hasn't been determined yet.
If in fact what you heard is true, I would do as others suggested, meeting with your school's financial aid office and filling out the FAFSA. Actually, the FAFSA you might want to check into right away, since there is a deadline for getting access to certain pots of money. It's been a long time since I filled one out, though, so things may have changed. Good luck.
posted by JenMarie at 11:47 AM on March 13, 2009
Response by poster: JenMarie: This morning the nature of "scaled back" was still fuzzy, this afternoon it was confirmed via official notice. This is the policy going forward at LEAST until the end of the year (my guess is it will be longer).
Everyone: Certainly $14k in student loans isn't huge when compared to averages, or my potential future salary, but I'm really loan-adverse, so I'm trying to avoid it if at all possible.
posted by etherealclarity at 12:15 PM on March 13, 2009
Everyone: Certainly $14k in student loans isn't huge when compared to averages, or my potential future salary, but I'm really loan-adverse, so I'm trying to avoid it if at all possible.
posted by etherealclarity at 12:15 PM on March 13, 2009
Assuming that you can expect to earn more money once you get your MBA, I think you could justify not contributing to the IRA for the two years that it will take you to finish. If you had been contributing the max, that should give you most of the money that you need to tuition right there. (Consider it investing in yourself)
posted by metahawk at 12:16 PM on March 13, 2009
posted by metahawk at 12:16 PM on March 13, 2009
At the same time, I'm concerned about neglecting my 401k
Look, you cannot have it all. You say "I can't put off finishing my degree, but I can't afford the out of pocket expenses either" but you can - you just don't like the options that make this feasible. Drop the 401K contributions all together, and get a loan if you need it. (Get it now, while you have a job and a salary history and can get the loan you won't be able to get if you're laid off.)
The point is that the long term value of the MBA will be worth more than the 2 years of missed 401K contributions. One will more than make up for the other in additional salary and future contributions.
You don't have to like it, you just have to get it done.
posted by DarlingBri at 12:36 PM on March 13, 2009 [2 favorites]
Look, you cannot have it all. You say "I can't put off finishing my degree, but I can't afford the out of pocket expenses either" but you can - you just don't like the options that make this feasible. Drop the 401K contributions all together, and get a loan if you need it. (Get it now, while you have a job and a salary history and can get the loan you won't be able to get if you're laid off.)
The point is that the long term value of the MBA will be worth more than the 2 years of missed 401K contributions. One will more than make up for the other in additional salary and future contributions.
You don't have to like it, you just have to get it done.
posted by DarlingBri at 12:36 PM on March 13, 2009 [2 favorites]
Seconding DarlingBri; investing money in completing your MBA will offer higher returns (in the form of increased wages) than investing your money in a retirement account.
I mean, if it didn't, you wouldn't have started an MBA in the first place.
posted by Mike1024 at 1:19 PM on March 13, 2009
I mean, if it didn't, you wouldn't have started an MBA in the first place.
posted by Mike1024 at 1:19 PM on March 13, 2009
Response by poster: DarlingBri and Mike1024: Fair point, there are tradeoffs... I'm mostly trying to transition from upset/angry mode to brainstorming-creative-options mode. Some of the ideas I've come up with already are refinancing my mortgage, freelancing during school breaks, take in a renter, etc. I'm just looking for alternate ideas here. I would much rather take a school loan than stop investing in my 401k though, especially right now when the market is down and there is a big potential for gain.
posted by etherealclarity at 1:34 PM on March 13, 2009
posted by etherealclarity at 1:34 PM on March 13, 2009
This seems like a perfect decision for an MBA to make- lay out the various options, and weigh the costs. I'd bet that a student loan hurts the least.
If you don't have the cash, you'll have to borrow from somewhere to get it. Either from your free time by working more, or taking out a loan, or refinancing.
posted by gjc at 3:19 PM on March 13, 2009
If you don't have the cash, you'll have to borrow from somewhere to get it. Either from your free time by working more, or taking out a loan, or refinancing.
posted by gjc at 3:19 PM on March 13, 2009
This seems like a perfect decision for an MBA to make- lay out the various options, and weigh the costs. I'd bet that a student loan hurts the least.
Refinancing your mortgage means paying off your school debt for 15, 20, or 30 years, probably at rates not substantially better than student loan rates, which typically have a term of 10 years.
Unless you have incredibly high-value skills and exceptional stamina, freelancing during school breaks while you're working full time is unlikely to net $14K over two years.
You'd need to charge a renter $583/month to make $14K over two years. Whether that's a feasible rent in your local market and whether it's worth it to you (in terms of loss of privacy and possible impacts to your work and school) is something only you can decide.
I think a loan is the best of all those possibilities. Can I have an MBA now? ;)
posted by Sublimity at 8:40 PM on March 13, 2009
Refinancing your mortgage means paying off your school debt for 15, 20, or 30 years, probably at rates not substantially better than student loan rates, which typically have a term of 10 years.
Unless you have incredibly high-value skills and exceptional stamina, freelancing during school breaks while you're working full time is unlikely to net $14K over two years.
You'd need to charge a renter $583/month to make $14K over two years. Whether that's a feasible rent in your local market and whether it's worth it to you (in terms of loss of privacy and possible impacts to your work and school) is something only you can decide.
I think a loan is the best of all those possibilities. Can I have an MBA now? ;)
posted by Sublimity at 8:40 PM on March 13, 2009
Response by poster: Sublimity: When I mentioned the possibility of refinancing my mortgage, I meant for a better interest rate which would net me extra money per month, not to roll in tuition costs. I think my answer might be a combination of things, not necessarily one solution. Though I really only have 1 year to raise the money, not two, I also calculated that because of the few classes that have yet to be reimbursed but are guaranteed, the amount is closer to 8k (not great, but much better than 14!).
For the record, my freelancing skills are worth approx $40-50/hr and $400-500/month plus split utilities is pretty reasonable for a renter in this area (as I know because I've rented out the room before).
I appreciate the suggestions and comments, and I am willing to get the student loans if it comes to that, but I am looking for more brainstorming-type ideas. Are there good ways to look for graduate education scholarships & grants? What's the best way to claim student costs on taxes for next year? (One of my coworkers claimed that you get a better tax rebate if you list it as a work-related cost.) Are there good sites out there for people looking for freelance work? Etc.
posted by etherealclarity at 9:12 PM on March 13, 2009
For the record, my freelancing skills are worth approx $40-50/hr and $400-500/month plus split utilities is pretty reasonable for a renter in this area (as I know because I've rented out the room before).
I appreciate the suggestions and comments, and I am willing to get the student loans if it comes to that, but I am looking for more brainstorming-type ideas. Are there good ways to look for graduate education scholarships & grants? What's the best way to claim student costs on taxes for next year? (One of my coworkers claimed that you get a better tax rebate if you list it as a work-related cost.) Are there good sites out there for people looking for freelance work? Etc.
posted by etherealclarity at 9:12 PM on March 13, 2009
This thread is closed to new comments.
Can you get an assistanceship with your department or somewhere else in your school? If so you may also get a tuition and fee waiver.
posted by wfrgms at 10:48 AM on March 13, 2009