The COVID-19 pandemic has not only upended the lives of millions, but also resulted in widespread financial consequences for families across the nation, prompting many young adults to reconsider how they can afford to pay for college while their parents confront reduced income and job losses. A recent survey shared by the Wall Street Journal found that 69% of 2020 high school graduates are concerned about the impact of the pandemic on their college financial budgeting and planning, and 25% have decided to delay their enrollment in college because of these concerns.
According to Christine Roberts, Head of Student Lending at Citizens Financial Group, “Equipping students with the skills and knowledge they need to make important financial decisions is critical to easing uncertainty and ensuring teenagers are able to make sound financial decisions.” Thankfully, there are resources for parents and students to assist them with making the right long-term choices for their future.
The best option for students with families that cannot afford to cover the cost of their education is to apply for scholarships and grants, as the funds provided in these awards do not require repayment. Scholarships are funded by many different organizations, such as businesses and nonprofit organizations and typically cover students based on demographics, academic qualifications, personal achievements, interests, leadership skills, volunteer experience, or planned areas of study.
Federal Grants (FAFSA)
Similar to scholarships, grants do not need to be repaid after you complete your degree. You must fill out the Free Application for Federal Student Aid (FAFSA) to determine your eligibility for federal grants, such as the Pell Grant. Your family’s financial situation will be evaluated to calculate Expected Family Contribution (EFC), or the amount of money your family should be able to direct toward your education, and this factor will be examined along with your dependency status, enrollment status, and the cost of tuition to determine which grants you qualify for.
College-Specific Financial Aid
After submitting the FAFSA, your college will send a financial aid award letter that describes the financial aid available to cover your college costs. If your family’s finances have declined beyond what you originally stated on your financial aid applications, you can contact the financial aid office of your college to negotiate your award and potentially receive a higher award than they originally offered.
Federal Student Loans
Submitting the FAFSA can also entitle you to receive federal student loans, which often feature lower interest rates and more flexible payment plans than conventional private loans. Federal student loans are either subsidized or unsubsidized based on your level of financial need, but there are limits to the amount you can borrow, and different lenders have their own requirements for repayment.
Private Student Loans
After you have received as much aid as possible from scholarships, grants, and federal student loans, the next step is to apply for private student loans offered by banks, credit unions, and other private lenders. These loans provide variable or fixed interest rates, and you have the option to begin paying them off while you are still enrolled in college or waiting until after you graduate. You can use private student loans to cover up to 100% of your college costs, but you must work out a repayment schedule to ensure you can pay off your debts while maintaining your credit.
Work-study programs offer part-time employment to students enrolled in college to help them cover college finances while they earn their degree, including tuition, room and board, and other fees. Submitting the FAFSA makes you eligible for work-study jobs on your campus, and although these jobs typically pay minimum wage, some colleges may offer higher pay for specific positions.
Begin Your College Financial Planning Today
If you are a parent concerned about college financial planning, or a college-bound student interested in learning how to minimize future debt, contact College Benefits Research Group today. We can inform you of your options for college financial planning, guide you through the financial aid process, and help make college affordable for your family.
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