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Helping Clients Navigate Higher Education Expenses in the COVID-19 Era

Helping Clients Navigate Higher Education Expenses in the COVID-19 Era

| February 04, 2021

The pandemic’s snowball effect on education is difficult to understate. Consider that 69% of students in a McKinsey survey believe COVID-19 has negatively impacted their quality of education.

It is clear the pandemic dramatically affected college attendance. Nearly 22% fewer high school seniors who graduated in 2020 nationally went to college in the fall compared to the previous year, according to the National Student Clearinghouse Research Center.

For families with students applying for college, the COVID-19 era made an already stressful time even more challenging. For families with students already attending and paying for college, hurdles emerged that were not part of the plan at the beginning of 2020. Financial advisors can help their clients navigate these unique circumstances by understanding what has changed and what resources are available.

College Application Changes

The pandemic changed the college application process itself. In most years, enrollment committees look at  grades, test scores, and extracurricular activities to make enrollment decisions. But the pandemic halted many of those activities and presented challenges even for high achievers.

Advisors can counsel their clients that colleges appear willing to consider the pandemic’s emotional and financial impact on students and their families. The National Association of College Admissions counseling expects colleges to me more flexible on decisions. For example, many schools have dropped ACT/SAT requirements for college applicants. Additionally, the Common Application (which is accepted by more than 800 colleges and universities in 49 states) now has an extra box where students can explain how the pandemic affected them.

COVID-19 and Student Finances

Paying for college appears to be a greater concern now than prior to the pandemic, with 30% of students telling that McKinsey survey there has been a strong or very strong impact on their ability to afford school. The added stress may come in part from scholarship opportunities that don’t materialize, campus housing closures, a move to online learning, and potential layoffs.

Financial advisors should take steps to help their clients with college students locate student aid and other resources to ease the stress. This article on Money Geek can help advisors and their clients get started in the right direction on topics including:

  • Paying for College During COVID-19
  • What if My Family’s Financial Situation Has Changed?
  • How the Coronavirus Has Impacted International Students and Study Abroad
  • Expert Insight on Student Resources and Finances.
  • Additional Coronavirus Resources for College Students

Advisors will also need to pay attention as developments unfold with the new administration in Washington. For those with federal student loans, President Biden signed an executive order on his first day in office that extends forbearance until at least September 30, 2021. That means most borrowers with such loans will not have to make payments during the forbearance period, while interest rates will remain at zero percent. The Biden administration has also indicated support for Congressional action to cancel some student debt entirely, although details at the moment are not clear.

Even in ‘ordinary’ times, paying for college is no easy task. But financial advisors can help remove some of the stress and anxiety, even if clients must tap into resources other than college savings plans to do so.  It is one way to develop a relationship of trust that is essential to a successful financial practice.