Q: Does it make sense to use my retirement savings to fund my Master’s Degree? I have no debt, some savings, twin toddlers and a husband who is currently out of work? The Masters Degree program will cost around $50,000.

A: For many reasons, I think it would be a very bad idea to use your retirement savings in order to finance your Master’s degree. First, there are better financial options to fund your advanced education. Second, since your husband isn’t presently working, if times get particularly tight economically, you may need to access some of those retirement funds to help keep your family afloat. (Note: If you do need the money in the future, take a loan from your retirement plan – not a withdrawal.

That way, you’ll avoid paying the IRS ordinary income taxes and a 10% penalty on the distribution.) Lastly, you’ve worked hard to build up a decent retirement nest egg. It would be a shame (and risky) to deplete those funds and jeopardize the financial security that your retirement assets will provide during your Golden Years.

Smart Ways to Finance a Graduate Education

Here are some alternatives to help you finance your Master’s degree program.

Your Employer

Since you are working, definitely start by asking whether your employer has a tuition assistance plan. Many companies will pay for tuition, or at the very least will offer a stipend to cover the costs of books and supplies.

Scholarships

Also begin aggressively seeking out scholarships for which you may qualify – based on everything from your gender and ethnic background to your major and certain hobbies you have. Consult a good online database, such as http://www.FastWeb.com, which lists thousands of scholarships.

Too many students (both undergraduate and graduate) fail to adequate explore the multi-billion dollar scholarships arena, and then they say “I couldn’t find anything for which I qualified.” Well, you have to make your scholarship search the equivalent of a full-time job. Plan to spend at least 30 hours a week – for three to four weeks – hunting for this free money. I know that’s a lot of time. But if you invest the time and energy now, the long-term financial payoff can be huge – well worth the short-term sacrifice you must make to find, apply for, and secure these resources. As a target goal: plan to apply for at least 12 scholarships. This will greatly increase your odds of receiving scholarship money.

Grants

Be persistent in finding grants too. Like scholarships, they don’t have to be repaid. Find grants via a specific department at the college you are considering, like the Business School or the Science Department.

Work Study

Also, the financial aid officer at any school you’re considering can tell you about Work Study opportunities to pay for college. Work study programs – where you work, say, in the library or the computer lab and get paid or receive a discount on tuition – help minimize your school fees or, for some people, the money you spend on room and board.

Paid Internships

You should also seek out paid internships to help you foot your college bills. This option is obviously most feasible for those who don’t have full-time jobs. In years past, students interned without pay, just to get valuable work experience and make connections. Today, with the high price tag of a college education, you don’t have the luxury of working free of charge. So investigate paid internships in your industry where you get a decent paycheck, along with work experience and access to professional colleagues and mentors.

Student Loans

Finally, I know you want to avoid college loans, but that’s not always 100% possible. If you’ve exhausted all the options listed above, and still come up short, then you should consider student loans. Always apply for federal loans first – not private loans. Federal loans carry lower interest rates, have fewer fees, and offer better forbearance, deferment and loan forgiveness options.

By exploring all of these financing sources, and getting creative with your own budget, you can pay for that advanced degree – without withdrawing your retirement money and hurting your chances of having a secure retirement.