Going Back to School: Good or Bad Debt?

textbooks

Tuition fees. Textbooks that weigh ten pounds each. Parking passes that never guarantee a space. Degrees that cost upwards of $90,000.

For the love of god, why would anyone want to go back to school much less accumulate more debt because of it?!

In all, one in eight Canadian families are carrying student debt, with a median value of about $10,000, StatsCan reported. There was a total $28.3 billion in outstanding student debt in 2012, the survey found.

Yet Canadian students’ debt burden “pales in comparison with the U.S.,” writes BMO economist Sal Guatieri, noting that south of the border, student debt grew 110 per cent between 2005 and 2012, to almost $1 trillion.

Source: The Huffington Post

At some point in our lives, many of us contemplate going back to school, whether it’s simply for professional development in our current career or to make a complete career change. For me, it’s the latter. Although I enjoy sales and love dealing with people, I’m finding myself underemployed, feeling unfulfilled and lacking in that everyday hurrah that gets most of us out of bed at 6AM – the strong desire to go to work. I want to move into the next evolution of my career and take my current sales and consumer behaviour/psychology experience and expand upon my original marketing degree from way back when.

So why in my right mind would I be willing to take on more debt?

Being divorced for four years, on my own and in my late thirties, going back to school part time can seem like a scary prospect; both financially and emotionally. No one likes extra debt. Least of all someone like me who has had a propensity for shopping, has hefty car payments and is still making her way through the consumer debt repayment journey.

There are very good reasons to go back to school.

Earning Potential. By increasing my value to an employer, I increase my earning potential. It also shows a willingness to be a perpetual learner and that you are motivated towards success in your career.

Career Change, happiness and fulfillment. There does come a point in one’s life where a change is necessary in your career, it could be your current situation is no longer challenging or you’re just no longer passionate about it.

Get a promotion. Sometimes going back to school gives you that extra edge you need at work to become an “expert” at what you do and impress your employer that you’re willing to go the extra distance for a promotion. It shows dedication.

Learn something new. Not everything necessarily has to be for work. Always wanted to play the piano, or learn to dance? Sometimes just a little extra learning for you can work wonders in your career.

Fufill your dream. Always wanted to be a lawyer? Well, it’s never too late. Many people I’ve come across in the past four years have all said to me “You can still do that, go back to school. It’s never too late!”

Why Education is Debt I’m Okay with – Good Debt vs Bad Debt

In my opinion, I see a much better return from debt incurred through education than through shoes, dresses or other silly consumable items. (Imagine that, eh? Out of the norm for me isn’t it.) Think of it – if someone were to ask you why you’re in debt, which of the two evils would you prefer – I’m a shopaholic or I went back to school so I could earn more and be contributing to a career I’m passionate about. Not a difficult answer is it? I don’t like the idea of extra debt period, especially when I’m working my butt of to purchase a condo/house and trying to get rid of that last $24K of consumer debt that just won’t seem to go away, but I’ve realized for my own sanity I must do this. Thankfully, I already have a degree in marketing and I’ll only have to go back to school part time.

Good types of debt are those that offer a return of some kind, such as Education, Business Ownership and Real Estate. Others suggest that even short term investing is okay to incur debt for but I disagree. There are too many variables when borrowing to invest.

Bad types of debt are pretty much everything else! Cars, boats, clothing/consumables, credit cards, lines of credit.

A study last year from TD Bank found students are increasingly delaying major life milestones due to the rising costs of education, with the situation being made worse by a sluggish post-recession job market. That survey found average debt load sits at around $27,000.

Source: The Huffington Post

Keeping back to school budget friendly

While I won’t be incurring $90,000 of debt to get an MBA, when it’s all said and done I will still have roughly $6300 in tuition costs (over 2 – 3 years) along with the cost of text books.

Shop Educational Institutions. You have your choice of school, so shop wisely. Many institutions offer similar courses but at varying prices, it can change just based on geographical location. On the other side of the coin, sometimes cheaper is not better, be sure to research the course, professors and the school to ensure the cost is justified. In other words, is it too good to be true?

Do online instead of in class. This will save you on the incidentals like parking, public transportation, and meals. Online is also much easier to fit into your schedule as there isn’t always a set class you have to attend, most is at your own pace.

Buy used textbooks instead of new.

What do you think: is education good or bad debt? Have you gone back to school for career development or a career change?

Comments

  1. I think it’s a loaded question, because there are so many factors at play here. If I had loads of debt, was in my mid-30’s and beyond, and wasn’t on track for retirement, then MY answer would be no. I’d probably lean towards taking skill set classes here and there to enhance what I already know, so for me, I edit on Final Cut Pro, but could take an adobe premiere class (or spend $30 on lynda.com) to add another skill to my resume. Every circumstance is so different though. But for me, I wouldn’t go back to school.

    • Michelle says:

      It is for sure and this was a tough decision for me. I spent several months debating it as I didn’t want the extra debt, although I’m hoping this months commission check will pay for the first round of classes. I’ve used Lynda.com and its fantastic like you mentioned to upgrade skills but considering I’m more or less doing a career change, I thought it would be best to go the traditional route.
      This is also for 3 certifications that complement each other – Digital Marketing, Project Management and Freelance Writing.

  2. Funny you wrote about this now, because I went into debt for grad school (marketing too, actually!) and I’m no longer in that industry, so I’m also toying with the idea of going back to get a graduate degree in my new field.

    Overall I think education is a good investment, so yes, going back to school is good debt in my book. However… it also depends on the length of time to complete the degree. One to four years is my “threshold”, so I wouldn’t want to go back to school to be a doctor for example because it would be too long in my opinion. But that’s just me, it really depends on the person.

    • Michelle says:

      That is funny! What area of marketing were you in? Why don’t you like it anymore?

      I’ve spent a lot of time working to understand my personality and talents to figure out what I’m best at. It’s difficult when you have several passions and hobbies to pick one and go for it.
      Yes, I agree it depends on length of the degree. I wouldn’t consider becoming an architect because it takes 5 years.
      Best of luck with your new degree!

      • I worked in social media marketing for a while, and it was really fun because I came in at the time where companies were just starting to realize they needed people to manage these new media, and I had total control over my company’s marketing in that area.

        It was exciting to be the Facebook and Twitter person at the office, but after a while it felt like work 24/7 because I was constantly checking updates and tweeting stuff, and eventually it burned me out. I still think it’s a great field, and I was very young and didn’t know how to set boundaries then, so maybe now I’d do a better job, but I like my new industry as well, so it works out anyway.

        Thanks and good luck with your studies! :D

        • Michelle says:

          That would have been awesome to be in it from “the ground up”, you’re right it would allow you a lot of creativity. Sadly, yes I can see where you would feel like you’re working 24/7 and checking social media all the time. I’ve found in my career that you do have to set limits otherwise co-workers, bosses and the business in general will just keep piling more on you until you have no life.

          Thanks :)

  3. I’m all for going back to school. It helped me get my current job which I love do it was well worth it for me.

    • Michelle says:

      I figure it’s the best way to get the job I want. Already signed up and head back part time in September :)

  4. I think education is good debt depending the usefulness of your degree you are working towards. If the money spent on education can be recovered by a potentially higher income, then it is worth it. However, age also plays a factor. If I was in my late 20s, early 30s, I would take the risk for more education and do a career change. If it was after my mid-30s, I would choose an education program that would develop my career and boost my income earning level in the career I have chosen (and not change careers). I just turned 30 and I lucked out with my workplace – they were willing to cover my education cost, though there was no raise, It is still an extra piece of qualification I have under my belt if I ever get laid off or wanting to leave. I plan to further my education, but in the same field, in the next couple of years which could increase my earning potential greatly.

    • Michelle says:

      Sounds like you’ve got a great plan! In the past I have done professional development courses that my work has paid for. However, this time I’m going towards the marketing side of sales and I’m looking to expand my sales experience into the marketing area of things. It will also help me out with any online websites or businesses I’ll be doing – so it has a twofold return hopefully.

  5. I haven’t gone back to school, but I have thought about it a bit. I too went through a divorce, though I was VERY young when I got married and when I got divorced. But, the reason I’m thinkin about going back to school is because I’m not happy in my career and all the other job openings in my area and in my ideal location (where I’d like to move eventually anyhow) are all extremely low paying compared to what I’m currently making and/or the cost of living increase I’d have to have to move to my ideal location.

    • Michelle says:

      It sounds like you and I are in similar situations. I’m no longer happy with what I’m doing and I’ve also been doing it for over 14 years and right from the beginning I knew I wanted to be in marketing – I just took the slow road there ;)
      If you’re not happy, you should absolutely consider improving your skills with online courses or going back to school. Good luck :)

  6. I think it depends on the field you’re in. I went to school over a looong time as I figure out ways to get that education without the debt. I’m in a well-paying, though by no means lucrative, career, so that’s something I took into consideration. $6300 is pretty freaking awesome. I’m willing to bet there are some scholarships out there that could help get that paid without having to incur any debt.

    • Michelle says:

      Quite true, the field will dictate the costs and length of time required to study. There is actually one scholarship available for one of the courses even though it’s part time. We’ll see if I can snag one!

  7. I think the factors are different for everyone’s situation but I say yay for going back to school. I acquired $28,000 while getting an AA for a variety of reasons, mainly because I had to start over in a new state when I was under the impression my classes would transfer. Only four did. :( Anyhoo, when I heard returning to school would be an additional $25,000 in debt, I cried and said I wasn’t going back. However, my earning potential with a BS in criminology will go up a lot more. I was passed up for a promotion that would have been an additional $12-15,000 alone because I didn’t have a bachelors. I was so upset that I am definitely going back. Even if I stay with my company or decide to go somewhere else, I will still earn up to 20,000 more a year which will definitely be worth it.

    • Michelle says:

      Yep, the increased earning potential is a huge plus. Yes, the debt sucks but the higher salary you could get could have it paid off in a few years.

  8. I think that you need to do whatever feels right to you for your own personal situation Make sure to have a clear end game. Don’t get hung up on age, you can play that up as a positive for a lot of employers…especially if your skills are up to date. If there is a way to cut tuition costs I would absolutely encourage you to explore them. Other than, I absolutely love education and am looking forward to hearing about what you plan to study. It sounds like you have a lot of changes coming up. Can’t wait to talk about them at FinCon!

    • Michelle says:

      Quite right, I need to do what it takes to get myself happy in a career and boost my earning potential. I was hung up on age for the longest time but I’ve realized that all through my life I’ve loved learning new things and have been successful. Yes, we’ll have to chat about it at Fincon! I’m getting excited the closer it gets :)

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