A reader in Canada is considering going back to school for a career change while continuing to work full time at her current job. But with tuition and other costs, she will have to incur some debt; up to $40,000.

She is hesitant because the estimated payback period of the debt is 10 years. Her aim in going back to school is to propel her forward and feel the debt may be a drag to her financial future.

Her question: what payment plan and payback period would be considered reasonable?

My take on going back to school:

Without knowing all the details, my thoughts on going back to school is that education is generally a worthy investment. Especially if the education is to facilitation a career change into either a field with higher earnings potential. Or a situation where employee longevity is increased. If she is living a more balanced life in terms of workload/hours.  She is more engaged at work. If the work is aligned with her personal values.

Look for available resources to help pay for school:

In Canada, many full-time education programs qualify for the Lifelong Learning Plan where one withdrawals up to $20,000 from their RRSP savings. The reader’s borrowing may be decreased to $20,000 if this program qualifies.

Look at varying payback periods:

Even if this program does not qualify for the LLP, a 10-year payback for debt can sound daunting. Breaking it down into numbers, it appears that the original loan amount implies roughly $350/month repayment for 10 years (depending on interest rate). Numbers found by using an online loan payment calculator.

Depending on the reader’s situation, this amount may not be so large as to be prohibitive from building a financial future, especially in a higher earning field. By doubling the payment to roughly $700, the online loan repayment calculator shows that the loan can be repaid in just 5 years.

If the program qualifies for the LLP and her loan was $20,000, then at $700/month, it can be paid off in 2.6 years.

In the end:

If we look ahead 2 – 5 years and we are more engaged during our workdays, we are happier and more optimistic about our future, I’d think going back to school is well worth the investment!