Hi,
My sister, 38, single, has been accepted to go back to school to get an industrial engineering degree. This is a 5 year coop program, or a 4 year accelerated program. We are Canadian, and the estimated cost for tuition and living expenses for her if she lives bare bones will be about $25k/year. This would be funded through her savings, government grants (starting at $1300, increasing to $6400 by 3rd year), interest free loans from my parents (they offered and can afford it), and working at part time jobs she can get and manage with her course load plus coop work terms.
She has a fashion degree,and has been working steadily in that industry for 15+ years and is currently a product manager, making gross $80k/year and feels that she has reached a career plateau in an industry that becomes increasingly tenuous in Canada. Living in Toronto, she doesn't save much money, but she doesn't have any debt at all either, having paid off previous student loans and her car is paid off. I would guess that while she is willing to "live like a student" for the time she is in school, she wouldn't be so inclined to be so hard core to do so while working. She will be moving to a lower cost market to do her degree which further supports the lower cost of living while being a student, and makes for a much better school/life balance due to reduced commuting time and costs.
The question now is how to get a handle on the long term financial impact of going back to school when weighing the lost opportunity and tuition costs vs. future earning potential. I have been mulling it over and think it doesn't make sense to consider her lost wages, rather what is important is her lost savings potential based on her current savings rate. So I am currently thinking along these lines:
True cost/year of university = (present day annualized savings) + (projected annualized living cost) + (tuition and books) - (government grants) - (projected part time + summer/coop income)
Benefit/year of working = (projected salary + bonuses) - (present day salary-inflation adjusted) +(the intangible peace of mind from career security)
She won't have to pay interest on the loans from my parents, but there will be lost investment potential from her lost savings. This is a really big, scary life decision. She will likely have to deal with age discrimination once she graduates, but since she already has solid career experience, hopefully that will be mitigated. Realistically though her future earning potential in her current job is also uncertain as her company is going through tough times. We are numbers people so this exercise will help alleviate some anxiety.
Is there anything I am missing?
