Q: I'm a single mom of four kids ages 15 to 21, and I'm thinking about going back to school. Right now I cut hair at a barbershop and work part-time at a museum; neither job includes health benefits or a retirement plan. My dream is to become a sonographer, which would require attending an 18-month training program that costs $25,000. I have enough emergency savings to cover my living expenses while I take classes, have only four years left on my home mortgage, and also receive child support. Can I afford to take this step?

A: Mom, you are making me smile. I love that you're working toward a dream, not just a job. And I am beyond thrilled that you're asking tough financial questions before you take on any debt—that's how you stay out of trouble down the line. Based on what you've said, I think we can make your wish come true.

Mark Kantrowitz, publisher of the Web site FinAid.org, advises prospective students to avoid borrowing an amount greater than they expect to take home in their first year on the job. According to the Bureau of Labor Statistics, the median salary for a sonographer is $65,210—more than double the amount you'll need. Keep in mind, though, that this number includes wages for all sonographers, not just rookies. And I want you to do some additional research to find out what these medical professionals make in your area.

Your next step is to form a borrowing strategy. There are two lending options for higher education: federal loans and money offered by private institutions. Always exhaust federal funds first; they are a better deal in terms of both cost (they have fixed interest rates) and repayment options (these vary based on factors like your income and the amount of time you plan to spend paying back your loan). Since you aren't a dependent of someone else, under the Stafford loan program for independent students you can borrow up to $9,500 for your first academic year and up to $10,500 for the following year at a maximum interest rate of 6.8 percent. (Check with your school to find out how these limits apply to an 18-month program.) These funds should meet most of your tuition expenses, but don't hesitate to make yourself a pest at your school's financial aid office. Find out what you need to do to become a candidate for additional scholarship or work-study opportunities. If you still can't cover your costs, I'd love for you to take care of your remaining needs by continuing to cut hair part-time while you take classes. Or perhaps it makes sense to delay school for one more year and spend that time saving money.

Q. I'm a junior in college, where my tuition after financial aid is $3,000 a semester. When I started school, I took out private loans, but now I've saved enough from working part-time and during the summer to cover the rest of my costs. Should I stop borrowing and pay my own way through graduation?

A: Pay as you go is always the best approach, so if you can avoid debt, you should. I am concerned, however, that you financed your first two years of school with private student loans, which typically have variable interest rates. When rates go up—that's a matter of when, not if—the monthly cost of the loan will rise as well. My guess is that you were charged an interest rate based in part on your FICO credit score; if it was low (say, less than 700), you could be paying a rate of more than 10 percent. The last thing you want is for your borrowing costs to continue to climb just as you launch your career.

Consider this strategy, which involves taking on debt in a smarter way: Use federal Stafford loans to cover your remaining tuition costs. The borrowing limits for dependent students are $7,500 in both your junior and senior years, which is more than enough to take care of your needs. I want you to use the funds you currently have—and the money you'll continue to earn from jobs over the next two years—to start paying off your private student loans immediately. The faster you settle those obligations, the more interest you'll save, and the better off you'll be.

Next: How to help a recent grad


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