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.