Lifestyle | How to finance a return to full-time studies

Going back to university to do a master’s degree may be a good investment, but how can you finance your studies when the program is only offered full-time?

The situation

In a few days, Angélique*, 35, will begin her master’s degree at university. Since the desired program is only offered full-time, she had to make the heartbreaking decision to leave the job she had held for 11 years at $75,000 per year.

However, the ultimate goal of doing a master’s degree is to improve her lot. After graduation, she hopes to teach at the university and be self-employed.

A renter, single and without children, Angélique considers that this is the ideal time to tighten her belt and carry out her project. She has no debt, her 2018 car is paid off and the rent for her small three-and-a-half is $690 per month, plus $61 for electricity.

“I would like to be in a bigger place one day, but I made the sacrifice in the last few years to stay there in order to save more easily for a house. I don’t see the solo house project before 2027. Unless love knocks on my door,” she says.

“I will devote myself full-time to my studies until spring 2025 and then find consulting assignments or part-time work for the period of writing my dissertation, which could give me an annual income of around $42,000,” she writes.

Angelique estimates that she will be able to return to her current lifestyle in 2026 and aims to later earn $100,000.

Part of her RRSP comes from her last employer, who paid 6% of her gross salary into it each year. The rest comes from another employer and her own savings, she says.

How should it finance the next two years?

“Should I prioritize the Lifelong Learning Plan (LLP) or government loans and bursaries?” she wonders. “Where should I put my RRSPs if I choose the LLP?”

When she leaves her position, her employer will pay her $6,503.09 gross at the end of August. “Is there a strategic way to use this amount?” asks the future student.

The advice

“Going back to school is a good investment because you increase your market value, especially when you want to go into business,” says Antoine Chaume Legault, financial planner and wealth management advisor at Assante Wealth Management – ​​Brossard.

By their mid-thirties, many Quebecers have children and a mortgage. Starting a business, being self-employed or going back to school is more difficult under these conditions, he continues. “A lifestyle of $2,000 a month like this gives you a lot more room to maneuver.”

Financing the project

Could she get loans and scholarships? Antoine Chaume Legault calculated the amount that Angélique could hope to obtain for a second-cycle university session.

“The program is designed for students with modest incomes. Consequently, when you earn a good salary, the program is less generous. The future student could get a $771 loan, an amount that may not even cover her books. Stopping working to get loans and bursaries is not a good idea, argues Antoine Chaume Legault, because the amounts awarded are determined based on previous income.”

Working part-time

According to the expert, the preferred option is to ask your employer to work part-time.

If that option is not an option, as in Angelique’s case, she should get a standard line of credit before leaving her job, insists the financial planner. “Banks are not going to lend you money if you don’t have an income and you’re not in a good financial position. You’re going to get credit when you don’t need it.”

Since Angélique already has significant experience, she could already think about offering her consulting services while studying, suggests Antoine Chaume Legault. “She could start looking for contracts and would have flexibility in her work schedule.”

By working as a consultant about ten hours a week at $75 or $100 an hour, she could reach an income of $36,000 in 48 weeks, the planner estimates. Quebec paid sites connect companies that have needs with consultants.

Prioritize the REEP

The Lifelong Learning Plan (LLP) allows you to withdraw up to $10,000 from your RRSPs per calendar year to finance your training or full-time studies up to a maximum of $20,000.

If her RRSP funds are not accessible, Angélique could take out a $20,000 RRSP loan before leaving her job. Rates are currently 6% and she would have a tax refund of about $7,200. She could also use the $6,500 vacation amount and borrow only $13,500.

But she has to pay off that loan in two years for it to be a good financial strategy, the financial planner insists. The $7,200 tax refund could pay off part of it next June.

Under the REEP, Angélique could therefore withdraw $10,000 this year and $10,000 next year.

If this strategy does not suit her, she can put the $6,500 vacation amount into a TFSA.

Invest in which products?

“I advise him to put his vacation money and RRSPs in a vehicle that will not be subject to market fluctuations,” explains Antoine Chaume Legault. “I would go for a high-yield savings account. Virtual banks still offer attractive rates. Otherwise, go for low-risk money market funds, the rates are close to 5%.”

Over the next 18 months, the money must be guaranteed, he argues.

“Then, we could move towards bonds. When we are in an environment of falling rates, bonds perform better. Bonds and bond funds are not guaranteed, are still safe, but can be subject to variations in market values. If she is comfortable with the risk, she could opt for 80% bonds and 20% stocks.”

Her master’s degree may cost her $20,000, but Angelique will increase her long-term income by $25,000 over the next 20 years. The return on investment will be immense, the financial planner reminds us.

“For your RRSP and TFSA investments, you want a safe product, because the risk of losing your cash in the short term is not worth it to get 1 or 2% more,” he concludes.

* Although the case highlighted in this section is real, the first name used is fictitious.