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How to Pay for College During a Pandemic

Dane Sauer

CFP®, Financial Planner


  • COVID-19 has altered norms around education as many colleges and universities close their campuses and switch to online learning.
  • The CARES (Coronavirus Aid, Relief, and Economic Security) Act passed by Congress provides over $6 billion to help college students whose lives have been affected by COVID-19. We encourage you to contact your institution’s financial aid office directly to learn about available options.
  • While it’s tempting to pay for your children’s education with your retirement funds, we don’t recommend compromising your own financial plan. Talk to your advisor if you and your family are impacted by changes to your financial goals.
Sending Kids to College

How to Pay for College During a Pandemic

COVID-19 has had a material impact on countless families across the world. For those who have children in college or starting college, this pandemic presents a dilemma and challenges traditional practices around teaching and learning. It also raises concerns about how families will continue to pay for college after their financial plans have been altered.

Here’s what we know: A lot of colleges and universities have switched to online learning for the remainder of the semester, and potentially further in the future. Some schools have cancelled classes altogether. While students adapt to these changes, their families are struggling to wrapping their heads around the financial repercussions that could result from these changes. If you have already paid for housing, meals, or tuition, will you be reimbursed since your student is no longer at school?


Support for colleges and universities

Through the CARES Act, colleges and universities will receive more than $6 billion to help college students whose lives have been affected by COVID-19. Each institution will receive a predetermined amount of money that is based on a formula devised by the CARES Act.

At this point, it is still unclear how each institution will distribute funds to students. U.S. Secretary of Education Betsy DeVos mentioned that the CARES Act gives institutions “considerable discretion” on how they will distribute funds. She also noted, “I would like to encourage the leadership of each institution to prioritize your students with the greatest need, but at the same time consider establishing a maximum funding threshold for each student to ensure that these funds are distributed as widely as possible.”1

There are many moving parts to the CARES Act, and how each institution decides to distribute funds will vary, but here are some common questions and answers that may impact your family and your college students.


Is there a distinction being made for institutions that switched to online learning versus schools that have completely shut down?

For institutions that have made the switch from in-person classes to online classes, there won’t be any change to the financial aid those students receive. According to Karen McCarthy, director of policy analysis at the National Association of Student Financial Administrators, “If an institution chooses that option, those students are fully eligible for the financial aid they have received and there will not be those financial aid disruptions there would be if the institution completely closed.”2


Will there be any refunds?

There is still quite a bit of unclarity around this topic. As mentioned, the CARES Act is providing $6 billion for universities and colleges. The amount each institution receives is based on a predetermined formula that takes into consideration the total number of students enrolled, in addition to full-time students who are eligible for Pell grants (a federal subsidy that helps students pay for college). At that point, each institution has discretion on how to distribute funds.

In any case, you will want to begin communicating with your financial aid office immediately. There are a lot of institutions that are providing support for these students—from financial support to assistance moving back home or even pro-rating room-and-board charges. It really depends upon each student’s school and schools are still working out how they will support their students.


What if our family income is reduced due to coronavirus? Will that impact the amount of financial aid we receive?

Again, this will vary depending on each family’s situation, so we encourage you to get in touch with the financial aid office as soon as possible and let them know how you have been affected. As you work with your financial aid department, inquire about a Free Application for Federal Student Aid (FAFSA) special circumstance request. Special circumstances would be any information required by the FAFSA form that shows the family’s inability to pay for college. You will need to provide documentation showing the changes to your family income.


What about students who are in the federal work-study program?

As you may know, the federal work-study program helps students pay for educational expenses through their qualifying work, which is typically done on campus. To become eligible for the program, students must show financial hardship and need to complete a FAFSA form. Students who had qualified for the federal work-study program and are no longer able to work due to disruptions from COVID-19, will still be paid by their institution.

Again, institutions differ in how they are handling these situations, but if students scheduled work hours or are working online/remotely, your will still get paid. We encourage you to contact your school to get confirmation.


When do students have to apply for financial aid for Fall 2020?

The FAFSA deadlines are still applicable. Students can begin applying as early as October 1 of the prior year in which they will be attending college. The latest deadline to apply is June 30. While they can apply as late as June 30, the earlier they start the process, the better.


What if my child has already graduated from college?

If your child is a federal student loan borrower, the Department of Education will automatically suspend payments on most federal student loans through September 30, 2020. This means that no interest will accrue on these loans during this time. It’s important to note that this relief only applies to federal student loans. If you have private student loans, you should contact your loan provider to discuss options. While the relief is automatically applied, some details, such as accounts paid by automatic debit, have not yet been confirmed and may vary by loan servicer.

In addition, current interest rates for student loans are quite low, so it may be a good time to refinance student loans to these lower interest rates.


The importance of keeping to your financial plan

Planning for and funding college expenses is a major concern for many families right now. If you have had changes in your financial situation, as many have during this time, it’s likely you’re wondering how this will impact your children’s college education and your financial future. While the notion of paying for part (or all) of your children’s education is admirable, it must only be done so after making sure you have adequate resources for yourself.

It’s paramount that you have a personal financial plan in place. The reason behind this is simple. Although there are loans and assistance for college education, there is no such thing for your retirement or medical expenses as you age. It may be tempting to think you can swap out one type of expense for another, however, it’s important to keep in mind that college funding for your children shouldn’t come at the expense of compromising your own financial plan.

While there are many things out of our control, we need to remember what is in our control. Having a financial plan, being invested appropriately for your risk tolerance, and reviewing your financial goals are a few things that you have total control over. We encourage you to speak with your advisor about changes to your financial plan or your children’s college funding.

For more information on funding your child’s college education, visit our article ‘529 vs Coverdell: Saving for College‘.



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