The coronavirus pandemic has caused financial stress for people around the world. Many people face unemployment or retirement savings that have suddenly—and significantly—decreased in value. One issue that is also causing a great deal of stress is how to pay for college in this environment.
According to a recent survey, nearly 70 percent of parents with children in college are now worried about being able to afford the cost of higher education due to the pandemic. Another survey found that 69 percent of parents and 55 percent of college-bound individuals stated that COVID-19 has affected their ability to pay tuition.
More than half of respondents said their higher education plans have changed, whether that means attending a school closer to home, taking time off, delaying the start of college, or choosing a cheaper institution. More than ever before, families will need to dip into savings or lean heavily on financial aid.
Unfortunately, a survey conducted by LendingTree found that nearly 40 percent of parents had to tap a child’s college fund to cover expenses incurred as a result of the pandemic. You may be wondering how you can afford college in this environment, especially since the financial hardship is not likely to abate any time soon.
Some tips for affording college during a pandemic include:
1. Shop for interest rates.
Parents and students may find themselves relying on student loans more than they have in the past. Taking out loans is a decision that needs to be considered carefully. If you make the decision to take out loans, the good news is that interest rates are much lower than they historically have been. Prior to looking for private loans, you should borrow the maximum amount available from federal sources.
That it is time to start shopping for the lowest interest rate. Credible is an online resource with a loan comparison tool, although it can also be useful to speak to creditors not listed on its website. Prior to signing any paperwork for a loan, you should use an online calculator to figure out what your monthly payments will likely look like to ensure you can afford them.
2. Speak to financial aid.
Colleges and universities understand the pressure that the pandemic has put on families, and many have allocated additional financial resources to student support. To learn about potential opportunities, you should speak to a financial aid officer at the school as soon as possible.
Some schools may offer their own loans with favorable rates or connect students to scholarship and grant opportunities. Institutions want students on campus and will often work with parents to find a solution that will work for all parties. Schools rely on income from students, so they will often have numerous options for students. An official appeal may even come back with a larger financial aid package.
3. Report significant changes.
For the most part, financial aid is calculated using information reported on the Free Application for Federal Student Aid (FAFSA) form, which currently uses information from the prior year’s tax return. For this reason, the report may not accurately reflect a family’s current situation, which may have changed quite dramatically since March. Schools are unaware of these changes unless they are reported.
You should investigate how you can file a revised FAFSA that more accurately represents your current situation. You should also send information about your financial situation to your school. Official financial aid repeals will require that parents prove their claims, which takes time. However, the school can often offer more aid based on these updates. Even small changes, such as the expiration of the federal boost to unemployment, can significantly affect your ability to pay.
4. Sign up for a payment plan.
Not all colleges and universities offer payment plans, but many will work with students to figure out how to make something like this work. This option is best for parents who think their financial situation will change dramatically in the coming months.
For example, if someone lost employment because of the pandemic but expects to be working soon, a payment plan can keep the student enrolled without necessitating additional debt. In general, school will want some sort of commitment or deposit at the start of the semester to ensure that future payments will be made. You should be sure to read the fine print in the case of nonpayment.
5. Consider the alternatives.
It can be stressful to think about delaying the start of college or taking time off. However, you should remain flexible about your approach to higher education. Many schools have switched to virtual classrooms. This may not be the most effective learning environment for every student.
You should think critically about your goals and consider whether or not it makes sense to take some time off of delay the start of school until things become more stable. Another option is taking classes from a local community college to save money on tuition and then transfer the credit. When taking this route, it is important to look closely at credit transfer rules and discuss your decision with college counselors to make sure all protocols are followed.