College Parents: Five Financial Tips to Get Your Student Ready for the 2020-2021 School Year

Michael Lux Blog, Strategy 0 Comments

Funding a college education has always been a source of stress inside college families. Navigating the FAFSA and tracking down the right mix of scholarships, grants, and loans can be a time-consuming endeavor. For many, the growing cost of higher education has represented a significant hardship.

Adding COVID-19 and the uncertainty of a worldwide pandemic has only made things more confusing.

I’m not an immunologist, so I won’t pretend to know what the future holds on the Coronavirus front. Instead, we will be taking a look at the ways families can prepare for a wide range of potential outcomes.

Don’t assume things will be back to normal in the fall

Everybody wants things to go back to normal.

At present, things appear to be trending in a positive direction as many government officials have started the process of reopening the economy.

Unfortunately, many experts warn that things may get bad again in the fall and winter. The hope is that the scary predictions don’t become a reality, but nothing is certain at this point.

The one thing we do know for certain is that college is expensive. Knowing that the conditions with the virus might get worse, it is critical to ask may of the what-if questions before committing to any plan.

Think about online classes for a semester or even a year

Part of the justification for the high cost of college is the networking and mentorship opportunities that in-person classes provide. These opportunities are significantly reduced in a remote-learning situation.

One of the valuable lessons from this spring is that if colleges close campuses, they won’t be offering a refund on tuition.

Given the risk of schools closing in the fall, one way to save a ton of money would be to take online classes at a less expensive school. This could be especially valuable for first and second-year students who still have numerous general education credits to fulfill.

The crucial part of this strategy is making sure the credits transfer.

It might not be an ideal situation, but it could be the best option available.

Consider a Gap-Year:
Students could take a year off to work an essential job in the food supply, such as a grocery store clerk or delivery driver. This brave contribution to the community could look excellent on the resume and help earn some extra cash for returning to school once things get back to normal.

Look for month-to-month leases on housing

Housing presents several complications.

Students living on-campus were often able to get some level of refund for room and board. This might be an argument for living on-campus in the fall of 2020. If the dorms are closed to students, the schools should probably again provide a refund for the services that were not rendered.

Those that live off-campus may want to explore housing a little differently this year. Signing a month-to-month lease could provide excellent protection in the event the school is shut down for an extended period. If things get bad and the school has to close, the student can move out and stop paying rent. On a year-long lease, that student will still be liable for payments.

Find out if the school is offering any refund or protection

If the spring of 2020 is any indication, schools are not offering any sort of consumer protection for tuition dollars, but some are providing refunds on housing.

The best time to learn the school’s policy for the fall is before classes start.

Send an email to the school and express your concerns about wasted dollars in the even that COVID-19 gets bad again in the fall. Ask if the school is offering any protections for students and their families.

If they are, it could be very beneficial to get that information in writing. If they are not offering any financial protections, it should serve as a reminder of the importance of considering all options for the fall.

Stick with federal student loans

One important lesson from the Coronavirus crisis is that federal student loan protections are very valuable.

Current federal loan borrowers are being charged 0% interest through September, and no payments are required. Once payments resume, borrowers will have the option of income-driven repayment plans. Those who struggle to find work will have the security of zero dollars per month payments.

Private lenders have made some efforts to help borrowers during the pandemic, but none of them can compete with the federal student loan protections offered.

If borrowing is necessary, federal loans are almost always the safest choice.

Final Thought: Plan Ahead

What happens if the school closes down?

What happens if somebody in the family gets sick?

What happens if mom or dad can’t help pay for school because of layoffs?

These are all scary questions, but they are real scenarios that many families may face in the fall of 2020. Answering these tough questions ahead of time will make facing any future hardships much easier.