Financial Aid for Older Adults Going Back to School
You can apply for most student loans — and take advantage of tax breaks for education — at any age. Just be sure you can repay your debt before retirement.
"I'm going back to school. What kind of financial help can I get?"
Even if you haven’t tossed a Frisbee in years, you may qualify for scholarships and financial aid, including federal student loans. You can also take advantage of federal tax breaks to help with college expenses.
Most federal and campus-based aid programs have no age restrictions and are open to both full- and part-time students. Federal Pell grants, for example, are available on a prorated basis to part-time students, depending on the number of credit hours they take. To determine your eligibility, fill out a Free Application for Federal Student Aid. Most college scholarships aren’t age-limited, either, and some are specifically targeted at nontraditional students, says Mark Kantrowitz, publisher of Edvisors Network. Fastweb’s database includes more than 50 scholarships for students age 30 and older.
Federal Stafford loans are open to college students of all ages, usually at more favorable terms than private loans. Because Mom and Dad aren’t paying your bills, you can borrow more than a dependent student—up to $20,500 this year if you’re a graduate or professional student, and up to $12,500 if you’re an undergrad. Unlike a 21-year-old, though, you won’t have decades to repay the loans, so don’t borrow more than you can pay off in ten years or before you retire, Kantrowitz says. If you borrow the maximum for two years as a graduate student, your monthly payments will be about $472, based on a ten-year repayment term.
Help from Uncle Sam
Adults can take advantage of 529 college-savings plans for themselves. Contributions aren’t deductible from your federal taxes, but two-thirds of states offer state tax deductions (usually you have to contribute to your own state’s plan to qualify, but not always). Earnings on your savings are tax-free as long as the money is used for qualified college expenses.
Don’t overlook unused money in a child’s 529 plan. If your son or daughter received a full ride (or decided to skip college and join a rock band), you can name yourself the beneficiary and use the money for your education, says Joseph Hurley, chief executive of SavingforCollege.com.
You can also take advantage of other tax breaks to lower your costs. The Lifetime Learning credit is available to offset up to 20% of your tuition and fees, for a maximum of $2,000. Unlike some other college tax credits, this one may be used for graduate school. You can also claim it for courses to improve your job skills, even if you’re not working toward a degree, as long as the courses are offered by an eligible educational institution. To claim the maximum credit, your modified adjusted gross income must be less than $62,000 if you’re single or $124,000 if you’re married and file jointly. (You can’t claim the Lifetime Learning credit for the same expenses paid for with money from your 529 plan.)
If your company provides tuition assistance, you can exclude up to $5,250 of the money from your taxable income. And if your education is work-related, you may be able to deduct some of your expenses. Your education expenses, combined with all other miscellaneous expenses, must exceed 2% of your adjusted gross income before you can claim them. In addition, your coursework must be required by your employer or improve your work skills. Expenses paid with tax-free grants, scholarships or employer-provided educational assistance are not tax-deductible.