How should a single mother approach her finances as she is returning back to school?
I am a 32 year old single mother of two kids and am returning to school this fall. I already have a LVN certificate and am going back to get my associates degree in nursing. My question is, would it be financially sensible to pay off my current loan of approximately $30K with the cash reserves (approximately $22K saved up) I have been saving. Or is it better to use that money to pay cash for the new college tuition this fall? I don't want to incur more student loan debt than is necessary.
With tuition rising as it is and the uncertaintly of what your future interest rate could be when the new loans go into repayment AND your understandable wish to not take on any more student loan debt, I'm all for paying your tuition in cash if you have it. If you can keep repaying your current student loan while you are in school, do it.
First of all many, "props" to you!!! As a product of a single mom, I have the utmost respect for you! It'll be hard but well worth it. My mom changed careers 3 times, while raising two rowdy boys, for that she's one of my heroes.
There are a few items to consider. Will you work as you go back to school? If so, will work reimburse you for tuition? While in school will the current loan stop accruing interest? Have you applied for student aid, scholarships, grants? If not, work with the school financial aid department. If you can cash flow tuition, do it. I'm a huge proponent of not having student debt, with that said, I'm reluctant to suggest using your cash reserves to pay off current debt. I'm concerned you'll not have a cushion to fall back on should something come up. Once you graduate, which I know you will, and get a raise, pay off all your consumer debt as quickly as possible. Get "momma bear" focused on your consumer debt and tear it up.
Without knowing your specific situation it is impossible to give definitive advice. However, as a general rule I would be hesitant to tell someone in your situation to liquidate their savings to pay off school debt especially because you are at outset of incurring even more debt.
What I mean is that savings provides the owner a safety net- for car repairs, for health care needs, for securing or repairing a residence, etc.- and as a single mother with two children you are their safety net too. You need to have something to catch you if any of you fall. Your savings provides this in a way that few other things can (again, I have a limited view of your financial situation so I cannot speak definitively).
In summary, Debt is bad... but student debt is not that bad and it is substantially better than the credit card debt you could potentially incur when you have no savings to fall back on in an emergency. On the far side of the degree when you are leaving school to get a job, if there is still a substantial sum in the savings account, that is when it would be a good idea to start looking to pay off the debt.
This is difficult to answer without knowing your total financial situation, but I am assuming you won't have much cash coming in while in school. So I wouldn't use your cash reserves to pay off a loan. I would keep it liquid for living expenses and future tuition costs. Once you finish school and have a steady income, you can attack the $30K debt with a vengence. Best of luck.
Hi – good for you for pursuing a nursing degree to become an RN! The other advisors have great advice. I’m going to assume that you’ve already worked with your school’s financial aid office to max out the grant money available. Grants are money you don’t have to pay back or even pay taxes on, and you want to get the max available in grants. Then loans come in after that. If you haven’t worked extensively with the school yet, get up with them right away. They will help you a lot. Another thought - I know you’re crazy-busy with two kids and a job, but if you can apply for any scholarships, that could bring in extra money too. It takes time to search for and apply for those scholarships, but again, your school may be able to help you out with scholarships tailored to your situation.
Once you earn your RN designation, your salary will be much, much higher and it will be easier (not easy, but easier) to pay off your loans. Right now you are making the trade-off of going without to build for yourself a structure that will allow you to eventually pay off your loans and earn a good salary for a comfortable life. Your associates degree will take two years I would think, so I feel as if it would be smarter to keep that $22K to use for living and other expenses and take the low-interest college loans to pay for tuition and education expenses. I agree with you that unnecessary debt is to be avoided, but it’s not like you’re buying frivolous stuff…you’re investing in yourself to gain a great return on investment.
This is exciting, and your decision to go for this qualification is really smart. Best wishes to you and the kids!