Financing a college education can be daunting even in the
best of times. Add a global pandemic and the resulting job insecurity that many
people are facing, and choosing which college to attend and how to pay for it
can seem overwhelming, particularly when you are the one footing the bill.
If college tuition is in your near future, it’s more than
likely that COVID-19 has you looking at things differently. And for good
reason: Financing a college degree is one of the most expensive things most
people will do in their lives, and economic uncertainty doesn’t make it any
easier.
Given the financial toll the coronavirus has had on many
people’s finances, following are a few things to consider when selecting a higher
education institution:
While college-based financial aid has long been
a significant help for many students to finance their secondary educations, the
amount of aid provided by schools may decrease in the coming year as schools
experienced their own pandemic-related financial troubles.
Some schools switched to all-remote classes
with no income from room and board. Others have had to forego shared dorm rooms
in favor of individual occupancy in the face of social distancing requirements.
Many are experiencing lower enrollment levels as many students take gap years.
Finally, for many, they’ve experienced a significant decrease in donation
levels. Due to such realities, students should expect a wide variance in the
amount of financial aid offered by different schools.
On an optimistic note, interest rates on federal
student loans are historically low and the Federal Reserve Board said it plans
to keep them low through 2023. In addition to this being beneficial for
students seeking first-time school financing, it is also a good time for those
with existing student loans to look into refinancing to lower interest rates.
Students whose families experienced a significant pandemic-related change in their financial situation in 2020 may be eligible for more financial aid than they previously expected, so long as any income loss can be documented. Families should look into what types of financial aid or federal loans their children may be eligible for, using the Free Application for Federal Student Aid (FAFSA).
Other potential funding options for students
exist through the Consolidated Appropriations Act that Congress signed into law
at the end of 2020, which designates $22.7 billion to the Higher Education
Emergency Relief Fund. A portion of the funding for the program is earmarked
for student aid that will not count as income. The program also added $150 to
the maximum Pell Grant award for the 2021-2022 school year—grants available to
low-income students.
There’s a big difference in the cost of private
colleges and universities versus their public counterparts. State schools
typically offer lower tuition for in-state residents—perhaps a more attractive
option for the near term, as uncertainty remains as to when social distancing
might end, to enable on-campus living and in-person classes to once again be
the norm.
