Employer will refund me the cost of college, should I risk going further into debt?

Question

I’m currently working towards paying off my debt. It’s something I despise. I had some emergency hospital bills come in this year. That and I have two new cars that I bought and they have turned out to be a financial burden. I’m upside down on both loans so selling them outright is not an option at the moment. When I pay off the negative equity I will be selling them ASAP.

In the mean time I’d like to attend college and work toward getting a bachelor’s degree in Physics. The company I work for will pay for your college education. All the way up to a masters degree. However, you still have to finance school yourself. They will pay you the cost of each completed class at the end of each semester.

So, I’d have to go further into debt to go to school. However the debt would be temporary.

I’ve come to despise having debt. As it’s made my life somewhat difficult. However, I want more education.

Should I take the risk of taking on more debt by going back to school?

Answer 1

I appreciate your aversion to debt, but is sounds like all you need to cash-flow is one semester at a time. If you can fit that into your budget (maybe slowing down debt repayment) and it increases your income in the near future then it might be a good idea. I would not take student loans and rely on the company to pay them back. Only do this if you can cash-flow the costs and get reimbursed.

Another option would be to wait a year or two until you get your debts paid down more, then cash flow the education.

Some other things to consider:

• How much will your salary increase as a result of the degree?
• If you leave the company within the next few years, you'll probably have to pay back some or all of the reimbursed expenses.
• Can you commit the time to classes and studying while working full-time?
• Don't pick the most expensive university that would be covered - consider less expensive options if it's more convenient both financially and on your lifestyle

Answer 2

If I was you I would tackle one problem at a time. I'd get on a written budget, and look for other income opportunities. That might be working a second or third job or perhaps opening a low investment business such as tutoring. Using that money, I'd pay down the car loans and then sell the cars. Also you will need something to drive, so buying a replacement car (for cash) is also needed. You may opt to keep one of your existing cars, but pay off the loan and any other consumer debt that you might have.

Once that is complete, you can then save up enough money to finance at least two semesters of college plus an allowance for books. You can then start attending school. There will likely be a lag from when you have to pay for the next semester and when you receive payment for the previous one. When payment is received from your company it replenishes the college fund and is not spendable on anything other than college.

During your semester you will probably need to save additional funds as in many jurisdictions there is a limit to the maximum allowable tuition reimbursement. Also there are likely some non-covered costs such as books and lab fees.

Additionally, there needs to be an evaluation of profit potential. Will this degree program lead to a higher salary? If so how much? Is it worth it, or is there a more profitable avenue/vocation? Now you may want to do this just for fun, and that is okay, but you might want to put that off until you are more secure in your finances.

You said you despise debt, and that is awesome. However, you don't seem to be in love with saving up to pay cash for things. You seem to think that using debt is the only way to purchase things that you desire. It will be helpful to your financial future to cultivate that love for saving and paying cash for things.

Answer 3

A couple of things about your employers plan.

1. Pay after passing the class is normal. They will only pay when you pass a class. They won't pay if you get a poor grade. Ask your employers what is considered passing.

2. Since you are in the United States look at community college for the first few classes. Unless you already have a degree or you will be getting credit for life experience, then those freshman English, and history classes can be taken at a community college. CC is cheaper, but work with the 4 year university to make sure everything transfers. Many 4 year school partner with a local CC to make the class transfers seamless. The lower cost means that you will be fronting less money in the early years.

3. Another benefit to CC is that if your employer has a maximum annual limit for the money they will spend, you can get more classes under the limit. The is also an IRS limit for it to not be taxable. For many companies they use the same limit.

4. Many CC's have rolling admission, so you don't have to meet the hard deadlines of the 4 year school. Some will not have fixed semesters so you can start any time if the class is online.

5. Some schools will allow you to pay the tuition in installments. That can make it easier to handle the first semesters tuition.