Financial Advice for College Students During the Coronavirus
The novel Coronavirus has had a sweeping impact in the world in a matter of months, from businesses facing forced closures to families losing employment and benefits. Throughout the United States, necessary efforts have been made to stop the spread. However, the results have been devastating in nearly all aspects of everyday life. Prospective and current college students, along with recent graduates, have also felt the negative impact of the coronavirus on several levels. Financial concerns, housing disruptions, and worries over the future of college have all left college students and graduates uncertain about the remainder of 2020 and beyond.
The Impact on New College Students
For high school graduates, the impact of the coronavirus has been steep. Many face a new reality in planning for college attendance this summer or fall because of financial uncertainties in their households.
Given the far-reaching economic ramifications of the pandemic, with hundreds of thousands of businesses closing their doors temporarily and for good, many families have lost income for the foreseeable future.
Unemployment is a short-lived fix, but statewide systems providing these benefits are overwhelmed and underfunded. Without the financial help of a parent’s steady income, some high school graduates may be forced to look at alternatives to paying for their college plans.
Student loans may become the only realistic option for prospective college students to attend summer or fall courses. Taking on a significant amount of debt to cover the cost of college may deter some high school seniors from following through with their plans.
Recent surveys suggest some high schoolers are creating a plan B that involves taking a gap year to work and save up for college expenses. Others are adjusting their higher education path to include the first year or two at community college, then transitioning to a four-year school. These paths provide a potentially more cost-effective course toward college, without the need to take on substantial student debt.
The Impact on Current College Students
Students currently enrolled in college are facing unprecedented challenges as well. For those that work to supplement their financial aid and cover expenses, many have felt the pinch of closing businesses and delayed unemployment benefits. Students are turning to debt to cover what they need while campuses are closed, and typical student jobs aren’t in existence.
Adding to the financial strain of current students is the abrupt shift to online learning. Students paying for an on-campus, in-person experience often face a higher tuition rate than those who opt for virtual classes. However, all students are receiving a virtual education, whether they made that selection or not.
Colleges and universities have not shifted tuition costs downward to make up for this drastic change. However, some have pro-rated room and board costs for those living on campus. Although federal student loan rates are set to decrease for the 2020-2021 school year, some current students are taking on debt they did not anticipate to cover these financial challenges.
Although the immediate impacts of the coronavirus seem bleak, college students still have a reason to be optimistic. There are several financial aid options available, including federal student aid, private student loans, and work-study programs.
Fill Out the FAFSA
The Free Application for Federal Student Aid, or FAFSA, is one crucial part of understanding financial aid options available to college students. The FAFSA application is submitted most easily online, and once reviewed, students receive detailed information about the type of federal financial aid for which they qualify.
Federal aid may include federal student loans, financial need-based grants, and scholarships. Students must be enrolled or accepted as a student in an eligible degree or certificate program to apply for the FAFSA. Additional federal financial aid may also be available due to surplus funding from the federal government to schools during the pandemic.
Private Student Loans
Private student loans are also an option for students concerned about covering the cost of college. Unlike federal student loans, private student loans are offered by private lenders and have more stringent eligibility requirements revolving around credit history and income. These loans may also have higher interest rates and less favorable repayment terms than federal student loans. For this reason, college students should exhaust federal financial aid before taking out private student loans.
These loans also may have less favorable repayment terms than federal student loans, but interest rates may be lower for well-qualified borrowers. College students need to exhaust federal financial aid before seeking out private student loans.
Work-study programs may also be a path toward easing the financial burden of attending college for some students. A work-study program offers students the ability to work part-time while earning a degree, which can help offset the need for student loans.
Work-study programs are administered through the college or university, and they are available to undergraduate or graduate students that have a financial need. Students may check with their school’s financial aid office and complete the FAFSA to determine what work-study programs may be available.
The global pandemic has created unprecedented uncertainty in many facets of everyday life, and college students and graduates are not excluded from the impacts. However, affording college is still a feasible task when graduates understand the current relief offered on federal student loans, and current students recognize their options for paying for earning a degree.
Andy Kearns is a Content Associate for LendEDU and works to produce personal finance content to help educate consumers across the globe. When he’s not writing, you can find Andy cheering on the Lakers, or somewhere on a beach.