If your retirement planning includes a career change, before you go back to school to study for that new career, make sure you will be on the job long enough and earn enough money to make this investment pay off before you hit retirement.
The New York Federal Reserve released data last month showing that of the 37 million people with student loan debt, 11.3 percent are people ages 50 to 59, and 4.2 percent are 60 and older. Of those, 12 percent between the ages of 50 and 59 are late on their payments, and 4.8 percent of those 60 and older are behind.
You often read advice for people out of work suggesting they study for a new career, but rarely do you see ideas for paying for that training. Mark Kantrowitz, a Pittsburgh-based publisher of FastWeb.com, a higher education finance site, says, "Before you borrow money, do a cost-benefit analysis. How many years are you going to work, and will you be able to pay off the loan?"
Kantrowitz believes that if you are in your early 50s, you shouldn't borrow more money than you can pay off in 10 years, devoting no more than 10 percent of your gross income to the payments. For many people, that's not a lot of money. If you are older than that, a five-year term might be practical, but even that might be stretching it.
Keep in mind, he says, "Once you stop working, you probably aren't going to have the money to pay off the loan."
If you still are intent on borrowing, see if you can qualify for a federal Pell Grant or some other U.S. government loan as opposed to a private-bank student loan. While no student loan can be discharged through bankruptcy, federal loans are forgiven when you die, so your heirs won't have to use money from your estate to pay them off. Private loans will have to be repaid from whatever resources you leave behind.
A better way is to pay as you go. Community colleges are modestly priced. It's also a good idea to explore scholarship opportunities, Kantrowitz says. A few are actually aimed at older students.