Financial Impact of COVID-19 on Families with High School and College Students

Covid Financial Impact on Families

Financial Impact of COVID-19 on Families with High School and College Students

Published on April 17, 2020

Covid Financial Impact on Families

Uncle Ed once said “Life is like baseball. Most of the time, nothing happens.”  However, even Uncle Ed would admit to being wrong the last few weeks.

In one of the most challenging periods in the last century, the Coronavirus has roiled healthcare systems and everyday life, with citizens wondering what the ramifications are for society and their everyday lives.

While public health and government officials are providing their expertise to the specifics of health and everyday life, high school students, college students, and their parents face special complexities in managing their finances and their college experiences.


COVID-19 and College Decision for High School Seniors

March and April would normally be months high school seniors use to visit or revisit colleges where they’ve been accepted to. They would attend admitted student events on campus or at local events hosted by colleges. But not in 2020 due to college closures caused by the coronavirus.

Instead, students are relying on virtual interactions to make their final college choices. Or some are considering deferring college starts this fall in light of all the uncertainties.

According to a survey by the Art & Science Group, one in six high-school seniors are now thinking they will choose a different path this fall. The options ranging from taking a gap year, enrolling in a part-time bachelor’s program, attending a community college, or working full time. 

For those still planning to start in the fall, many colleges have postponed the traditional May 1st deposit date to June 1st, giving families more time to make decisions.

According to a College Ave Student Loans survey of 2,080 parents of college students conducted by Barnes & Noble R2C Insights, 94% of those parents surveyed said paying for college is stressful.

Job losses and investment declines are sure to exacerbate this stress and are forcing families to rethink how much they can afford to pay for college.

These changes are also pushing families to submit an increased number of financial aid appeals, hoping colleges will be more generous as they reconsider their aid and merit scholarship offers.

Although circumstances will continue to unfold, there are steps families can take:

  • Stay up to date on announcements from colleges your student has been accepted to. Check student emails, portals, and college websites. Watch for changes to deposit deadlines, student orientations, and fall classes.
  • Don’t be afraid to call and ask for help. Flexibility will be big this year. Colleges and universities may be more flexible than in the past to make exceptions to deadline dates and reviewing financial aid appeals.
  • Create back-up plans. Research alternative non-college options. If the situation changes and your student won’t be on campus this fall, ask for a deferral if this is something your student is interested in.
  • Re-evaluate your financial situation and be realistic about what you and your student can afford. This may entail changing course altogether and explore starting at a local community college and then transferring to a 4-year college.


Impact of COVID-19 on College Students and Parents

For college students, life changed dramatically. Face to face classes moved online and students were forced to leave campus and move home.

To compensate some colleges are offering pro-rated refunds for room and board.

When college closures were first announced, Smith College, Harvard University and Amherst College, quickly offered students prorated room and board refunds. Many other schools also came up with partial refund plans in the following weeks.

Though not all colleges have been as generous so far.

Students at some colleges that have either not made announcements or have decided not to provide refunds are initiating lawsuits and petitions. Students at the Tish School of New York University were outraged when the school dean said there would be no tuition refunds and attached a video of herself dancing, to the email. 

In addition to navigating tuition and/or room and board refunds, college students and their parents can receive some form of relief from the recent CARES Act.

Federal Student Loan Payments Suspended

  • The CARES Act suspends payments on certain Federal Student Loans until September 30, 2020. Additionally, interest accrual is suspended during this period. Keep in mind this is for federal student loans only, not private loans.

Relief Check

  • Through the CARES Act, an estimated 150 million households will get a relief check. Individuals who have filed their taxes as Single will receive a check up to $1200, couples who have filed taxes as Married Filed Jointly will receive a check up to $2400. These amounts are for incomes up to $75,000 (Single filer) and $ 150,000 (MFJ) with a phaseout to $0 payment at $ 99,000 / $198,000.

Support for Parents with Dependent Children

  • There is a $500 payment to parents for their dependent children who are 16 and under. As to the $1200 CARES checks referenced above, anyone who is listed as a dependent on another return will not receive this check even if they have previously filed a return. As a reminder, it is possible to file an income tax return but also be listed as a dependent on another person’s return.

Targeted Benefits

  • Understand the CARE Act targeted benefits. This 800+ page bill includes numerous specific benefits, such as enhanced unemployment for typical filers as well as for gig workers, small business incentives, changes in RMD’s for IRAs and 401ks, emergency loans from your IRA, etc. Think through your life specifics, then review and discuss possible benefits with your accountant or financial planner.

State Specific Offers

  • Understand what your state is offering and see if it applies to you. For example, California has temporarily prohibited evictions, New York has halted collection of some medical and student debt that has been referred to collection, Washington State has approved some small business assistance. States are responding in unique ways that best meet their needs.

In addition to provisions in the CARES Act, the reduction of interest rates opens up possibilities for refinancing mortgages, private student loans, and potentially parent plus loans.

With interest rate reductions and easing of credit, home interest rates remain low. With rates offered below 4%, now is perhaps the time to review your mortgage(s) as part of an overall financial strategy.

For students who have graduated and have private student loans, there’s no downside to researching rates with other private lenders, such as College Ave Student Loans, and refinancing into another private loan that has a lower rate.

However, if you have federal student loans, carefully consider the current federal benefits.

Due to COVID-19, the federal government is offering benefits that only apply to certain federal student loans; benefits that will no longer apply if you refinance an existing federal loan with a private lender.

And for parents with federal parent plus loans, now is also a good time to research rates with private lenders to compare those rates to the rate on your parent plus loans.

Refinancing an existing loan, with a lender like College Ave Student Loans, can significantly reduce monthly payments and the overall cost of the loan. With other financial pressures, being able to reduce monthly debt, will help ease your financial anxieties.  


It’s a Good Time to Consult Professionals

It’s a lot to digest!

If you are in over your head on some of what is outlined above, reach out to your college consultant, accountant, financial planner or other trusted fiduciary advisor.

Finally, remember that you are not a financial being or a work being or a consumer. You are a human being. Connect with other humans, be human and know that this will pass.






This article is sponsored by College Ave Student Loans. Check out their private student loan rates and see how they compare to parent PLUS loans.

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