Last Updated: February 22, 2010 

If you're out of work, prospects for a new job seem dim, and you're wondering what to do next, consider this plan.

Why not go back to college? Yes, many financial planners suggest that going back to school is a perfect way to take advantage of the recession. You get to acquire new knowledge and skills that just might give you an edge in the job market, no matter your age, but especially if you're 50 and older.

"This is an opportune time for older Americans to 'reinvent' themselves, to do what they want in retirement," said FPA member Francis St. Onge, CFP®, of Total Financial Planning. "It would be especially easy for older workers who might have retirement security in the form of a defined benefit and 401(k) plan."

But what if you're not as well off or if your retirement isn't quite secure? "They need to reinvent themselves, too," said St. Onge, who himself went through the very same process more than 20 years ago, reinventing himself as a financial planner. "They have to figure out what they really want to do for the next quarter century with respect to working to supplement what they do with their free time."

There are plenty of financial and other considerations. Unemployment is high, demand for goods and services are low, and education is not inexpensive. Indeed, you'll have to calculate how much education will cost and how you'll pay for it. You might have to apply for financial aid or a loan from a bank or tap the equity in your home. You should also check if any education credits and deductions might be available. And you should, if you have a family, make sure they are on board with your plans.

"You also need to examine why you want to go back to school," said FPA member, Philip A. White, CFP®, at Ducere Capital. "Fundamentally, most people attend school based on a blend of two objectives: 1) they want to increase their future earning power and 2) they have a desire or passion to learn the subject matter."

If you have a desire or passion to learn the subject matter, it's a pretty easy answer. "Do what you love," Ducere said.

But if you're primarily motivated by the desire to increase your future earning power, he says the answer is more difficult. Here's what he recommends:

1. Look at the future career prospects. What kind of career or job will your education enable you to do? What are the average salaries for these jobs in the area of the country you want to live? Are the future job prospects a large enough improvement over your current situation to justify the cost of education?
2. Build a budget and be very careful of debt. It is easy when you are young and able to live like a starving student. Once you have 'tasted the good life,' it is much harder to scale back your spending. Use the estimates provided by the financial aid office to approximate your student loan total and figure out what your monthly payment will be when you are done with the program. The sticker shock might make ramen noodles taste better.
3. If you make the leap, enjoy it. Going back to school can be a great way to "start over." Get out of your comfort zone. Look for opportunities to do things you wouldn't normally try. Join a student club, participate in campus volunteer work, and find a way to enrich the student community you have joined.

With that said, "it's never too late to get more education," St. Onge emphasized. "You never know where it will lead or what doors will open for you."

If you need help trying to figure out whether to go back to school and how it affects your financial plan, consider consulting with a financial planner.