Four Things Older Adults Considering Grad School Should Know

NEW YORK (MarketWatch) -- An advanced degree can help put mature professionals on the fast track to success in a new field. That said, the degree will not come cheap, so be sure to safeguard your finances before plunging back into the world of academia.

In the December issue of Money Magazine, contributor Karen Cheney offers four tips for over-40s considering going to graduate school:

1. Make sure your investment will pay off

Before you commit thousands of dollars and years of your life to pursuing an advanced degree, decide where you want to end up and determine if the degree will make it easier to get there.

If you think a master's will net you more money in your new career, speak to people already working in the field and find out if that's true. If you're hoping an advanced degree will save you from having to work your way up from the very bottom, speak to a headhunter to see if a degree will help you climb the ladder faster.

Cheney also recommends poking around on job boards to find out what kind of job prospects there are in your chosen field before committing to graduate school.

2. Consider going part-time

Grad school is not cheap. Graduate students pay an average of $22,000 a year to attend public universities; those who choose to go to a private school will spend an average of $34,000. But you can cut down the cost of earning your degree significantly by enrolling in a part-time program. If you can manage to keep your day job, your employer may even help subsidize your studies.

"A quarter of all graduate students age 40 and older receive employer aid averaging about $3,000 a year," Cheney reports. But be forewarned: If you quit your job too soon after earning your degree, you may be forced to reimburse your employer.

3. Get government assistance

If you're determined to go back to school but are having trouble coming up with the money, remember: loans aren't just for kids. Qualified graduate students can borrow up to $20,500 dollars in federal Stafford loans. Keep in mind that retirement accounts and home equity aren't factored in by the government when you apply for student loans. To apply, visit www.fafsa.ed.gov to fill out a Federal Application for Federal Student Loan Aid.

4. Take all available tax breaks

There are a number of tax breaks available to returning students. Will your income fall below $57,000 a year while you're a student? If so, then you qualify for the lifetime learning credit. The tax credit is worth 20% of the first $10,000 of qualified expenses you lay out for graduate school, up to a maximum $2,000. The credit will phase out gradually on 2007 returns for those who earn more than $47,000 but less than $57,000.

If you make less than $80,000 in 2007, you can deduct from your taxable income up to $4,000 in tuition and school expenses next year, Cheney advises. The deduction phases out for those earning more than $65,000 but less than $80,000.

Neither the credit nor the deduction are available to those whose use the married filing separately status.

And don't forget: people of any age can use 529 plans to shield earnings dedicated to funding education.

By Marshall Loeb