COVID & College Financial Aid: Here’s What Has Changed in 2020-2021

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The college application process, and specifically the process of applying for financial aid, has confounded parents and students alike for some time—and that was before families were faced with COVID-19.

In a time of so many uncertainties, the college financial landscape has already faced several challenges. While there will continue to be new plans and procedures implemented, here are a few of the impacts the novel coronavirus has had on the college financial aid process.

Student Loan Relief

One of the first moves made as part of the CARES Act was to place federal student loans into administrative forbearance—meaning that payments are not required, and the interest rates move to 0% from March 13, 2020, through September 30, 2020. Students were and are still able to make payments on the loans so as to reduce the principal, but they are not required to make payments and will not accrue interest during the time period.

While the administrative forbearance is currently set to end on September 30, there is speculation that it could be extended if the government passes another relief plan.

Limited Early Action and Early Decision Opportunities

Usually, students are able to select between a range of admission options, depending on the colleges they apply to. These generally include Early Decision, Early Action, and Regular Decision. Early Decision deadlines had been as early as November 1 for some schools, with Early Action applications coming due soon after and followed by Regular Decision.

For the 2020-21 school year, there will likely be more and more schools consolidating their applications into a single group. One school has already made the switch. Princeton University, which had previously offered Single Choice Early Action and Regular Decision, will now only offer the Regular Decision deadline, January 1, 2021, for the class of 2025.

The school’s website states, “The University will move to one undergraduate application deadline of January 1, 2021, for this first-year admission cycle. All applicants will apply using either the Coalition Application or Common Application through the Regular Decision process and will receive decisions on their applications by April 1, 2021.”

Princeton University acknowledged the “altered environment” students and staff will be returning to in 2020, adding that the school hopes that consolidating the admissions process to Regular Decision with a deadline of January 1 will “reduce some of the pressure on applicants and give them the time to prepare their strongest applications.”

This is likely to be a trend that continues. While this certainly impacts those applying for admission to schools, it also will impact financial aid deadlines. Previously, families had from October 1—the date the FAFSA and CSS Profile forms open to incoming students—until only early or mid-November to complete their financial aid applications.

Now, with the changes Princeton University has made (and as other schools are likely to follow), it would seem that families will have more time to collect their tax and other financial information and complete the forms required by their prospective schools.

Schools forgoing increases in tuition cost

It’s not a secret that the cost of higher education has increased exponentially over the past few decades. It’s common for schools to increase tuition and their range of fees by at least three percent each year.

However, as a result of COVID, many schools are putting in place tuition freezes and forgoing the standard annual increases that were already planned and announced prior to the outbreak of novel coronavirus.

In fact, some schools are taking even greater measures to support their students. One example is Davidson University in North Carolina, which will allow students the option of deferring their fall 2020 bills.

The university will send out invoices to families for the fall semester in July 2020, and they will be able to defer payment until August 2021 (except for seniors, who have until April 2021 to pay their bills). In an announcement on the initiative via the school’s website, Davidson notes the “unexpected, immediate challenges” faced by many of its students due to COVID.

Of course, there have been many cries for, at minimum, an easing of the tuition and fee increases colleges and universities were passing on, in many cases, each and every year.

Even before COVID hit, this resulted in nonprofit colleges and universities discounting tuition and fees for a majority of students. More and more schools are using financial aid to entice students to join their ranks, a move that causes institutions to forgo more and more revenue they would otherwise collect if they were capturing the full ‘sticker price.’

According to the 2019 NACUBO Tuition Discounting Study, which was conducted prior to COVID, “nonprofit colleges and universities reported an estimated 52.6 percent average institutional tuition discount rate for first-time, full-time, first-year students in 2019-20 and 47.6 percent for all undergraduates – both record highs.” As you can see from the list below, the total tuition discount offered by schools has steadily increased:

Average Institutional Tuition Discount Rate (First-Time Undergraduates)

  • 2010-11 School Year: 42.0%
  • 2015-16 School Year: 48.0%
  • 2019-20 School Year: 52.6%

Again, to reiterate, those numbers for 2019-20 were determined prior to COVID.

It’s likely that this rate will have increased again for the 2020-21 school year, and that means that rising high school seniors looking ahead to the 2021-22 school year – which they will begin applying for in the coming months – should have as much opportunity as ever to land grants, fellowships, and scholarships.

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Emergency financial aid available

As schools and families alike brace for the 2020-21 school year, institutions will have emergency aid to help them navigate the unknown in the coming fall semester.

In addition to relief efforts for American families, Congress is considering additional plans to offer relief to colleges and universities across the country ahead of the 2020-21 school year.

One example is the Coronavirus Child Care and Education Relief Act (CCCERA), which would include relief to higher education. Among other directives, including implementing public health protocols, the Act would help finance emergency financial aid that students would be able to access for different expenses that they incur related to their tuition, room and board, and other financial needs.

While not all of this aid will go to students, schools will likely be offering more and more emergency financial aid grants for the fall and spring of 2020-21. Students and families should be in touch with their financial aid offices if they find themselves in need of additional aid.

More students are deferring the start of college

Whether the reason is financial or health-related, more and more students are deferring starting college in the fall. The number of students electing to defer starting school in August and September is likely to continue to increase as the fall approaches.

Students are opting to either defer until the spring semester, push their start back a full year to the fall of 2021, or look for another school entirely due to COVID.

While students were comfortable committing to their schools, and thus taking on the remaining costs to the institution, ahead of COVID, many families have seen their financial situations change over recent months. This has resulted in some students opting to remain closer to home at state or community colleges that cost families less out of pocket than private institutions.

Other students who find themselves or their loved ones at higher health risks related to COVID are opting to remain home for a semester or even a full year before starting their college career.

Some schools are more willing to allow deferment. Many allow for gap years as well as deferment to a future year, and schools in general are more willing to allow these options given the current environment.

Others, including Dartmouth, have announced that the Class of 2024 will not be able to defer enrollment. In a statement to the class, Lee Coffin, Dean of Admissions and Financial Aid, advised families that didn’t want to enroll for the upcoming fall semester “to cancel their enrollment by July 10 and reapply for admission to next year’s class.”

In the case of deferment, students need to confirm if the school will honor their merit-based scholarships the following year or if they will need to reapply for scholarship consideration despite their guaranteed acceptance into a future class.

While merit-based scholarships can be carried over to the next year at the school’s discretion, need-based financial aid is a trickier situation since students and families are required to reapply for need-based financial aid each and every year.

Families should consider any changes to their financial profile from their 2018 to 2019/20 tax years. Any increases in income and assets, even in an environment such as this, could result in reductions in the need-based financial aid offered by schools for a future year.

Opportunities to ask for more financial aid due to COVID

America and its businesses have been hit hard by COVID. Shutdowns across the country have made it difficult for some companies to operate as they did before the virus. As a result, more and more households will face reductions in income compared to what they were expecting even months ago.

For financial aid purposes, those families who applied for the 2020-21 school year used their 2018 federal income taxes to fill out their forms. That’s right, the financial aid that those students preparing to enter school this fall received was based on their financial information from nearly two years ago.

It’s not uncommon for financial situations to change over this amount of time, and that’s certainly the case in this environment.

Students preparing to enter school this fall should be in touch with their financial aid offices. Most schools provide some sort of process where changes to financial aid can be considered for adjustments to financial aid awards. These ‘Special Condition’ or ‘Special Circumstance’ forms will allow families to estimate the changes that had taken place between when they applied for financial aid originally and now.

For those students applying for college for the 2021-22 school year, financial aid applications will be based on 2019 taxes. While that’s not quite as long ago, for many, much has changed in the last several months, meaning these rising seniors and their families may also have drastically different financial profiles than they did entering 2020.

Schools will generally ask families to complete the financial aid forms as they are required, meaning families will input information based on their 2019 taxes, even though this doesn’t necessarily reflect their current financial situation. Families should complete the forms as requested by the required financial aid deadlines. They should then follow up with the schools directly to determine the process for consideration for additional aid due to situations such as the loss of employment or other loss of income. Families will most likely be pointed to the ‘Special Condition’ or ‘Special Circumstance’ forms referenced above.

Takeaways: COVID and Financial Aid

As you can see, there are going to be significant changes to the college process, and specifically to higher education financial aid, in 2020-21 and beyond. Students and families enrolling for the 2020-21 school year who need additional financial aid due to COVID should be in touch with their school’s financial aid office.

Those families that are considering colleges for 2021-22 should be aware of their financial aid opportunities and the leverage they have with schools given the decrease in overall demand, with more students opting to remain closer to home or deferring the start of college altogether, combined with the increase in tuition discounting.

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