Paying for college is not easy, even in the best times of the economy. So when the worst of times come, as millions of Americans did during the pandemic, paying for a college degree becomes drastically difficult.
Although a large-scale student debt forgiveness program has been called for, so far little progress has been made in this regard. But the pandemic has been a catalyst for other significant changes by Congress, the Biden administration, and universities themselves that could make higher education more affordable and student debt easier to manage.
It is important to understand what’s new and how to take advantage of changes that could help make studies more affordable. Whether you’re going to college in the next year or two, heading to campus in the fall, or leaving college with a ton of debt, this guide will help you navigate the new landscape.
Private universities offer unprecedented discounts
Many private universities whose enrollment was affected by the pandemic are making significant discounts on tuition and other fees to attract new students and retain current ones. On average, college students got a record discount of 48% on tuition and fees in the form of scholarships, subsidies and helps in the school year 2020 – 21 of private schools, according to the annual study of tuition discounts of the National Association of College and University Business Officers (NACUBO). This figure is higher than the 46% of the previous academic year and the 36% of ago 10 years.
What to do : Expand your horizons. The discount trend will not end when the pandemic does, according to NACUBO. Many private universities were already facing a stagnation or decline in their enrollment and were using discounts to compete for students. The pandemic only accelerated pressure on tuition. This means that, now more than ever, prospective students should not assume that public universities and community colleges are necessarily cheaper than private universities, or that the university of their dreams is out of reach.
What you are actually going to pay depends on your financial situation, and you will not know what a university will offer you until you have been accepted and received a formal offer of financial aid. Use the College Navigator tool from the National Center for Education Statistics to see how much financial aid the colleges you are interested in are likely to offer.
Congress is donating billions in student scholarships
Since March 2020, Congress has awarded universities a fund of $ 36,000 millions to distribute in the form of emergency financial grants (money you don’t have to pay back) to students affected by the pandemic. Universities have until September 2023 to award the money, which must go directly to the students of that university. “This will help people who are struggling financially stay in college and keep them from going into further debt,” says Mark Huelsman, a member of the nonprofit Student Borrower Protection Center.
What to do : Talk to your university. You can use the funds for any college-related expenses, such as food, housing, medical care, and mental health and childcare needs, as well as tuition, says Megan Coval, vice president of federal policy and relations for the Association. National Administrators of Financial Aid for Students.
Although the Department of Education ordered universities to give priority to students with the greatest financial difficulties, scholarships are not only for low-income students. But the exact criteria for meeting the requirements vary by college, so you should check with your college’s financial aid office to see how it works, says Coval.
Some colleges may automatically award scholarships to students who qualify for a Pell Grant, federal financial aid for lower-income students. Others may distribute the money to all enrolled students, regardless of whether they qualified for financial aid in the past. And others may request that you fill out an application. The amount you receive will depend on your needs and the amount of money given to your university, but it can be several hundred or several thousand dollars, says Coval.
The pause student loan repayments could end soon
At the beginning of the pandemic, Congress directed the Department of Education to automatically suspend federal student loan payments without penalty and without charge interests. Debt collection from delinquent borrowers was also stopped. The pause in payments was extended twice from March 2020 and currently ends on 30 September 2021, although the Department of Education has indicated that the exemptions can be extended again.
What to do : Find the best payment plan for you. Just because you don’t have to make payments doesn’t mean you should choose that option. Since the interest rate on paused loans is zero, any payments you make will be applied directly to principal, which means you can pay off the loan faster, says Mark Kantrowitz, financial aid expert and author of “How to Appeal for More College Financial Aid ”. So make the payments if you can afford them.
When the required payments resume, you will receive a notice from your loan servicer. If payments are going to be a struggle, apply for an “income-based” payment program that will limit your payment to a percentage of your income. Talk to your lender or visit StudentAid.gov to enroll in an income-based plan.
When payments resume, make sure there are no glitches, says Kantrowitz. For example, if you previously had automatic payments, make sure they are still enabled. (Many lenders give an interest discount to borrowers who make automatic payments.) Those months of paused payments still count toward the total time needed to qualify for loan forgiveness programs, such as the utility loan forgiveness program, which requires 120 payments on time. If you are in such a program, check with your loan servicer to make sure they are counting the months your payments were on hold.
There are more loan cancellation options
Despite calls for President Joe Biden to enact a wholesale loan forgiveness program for federal student loan borrowers, no formal plan has been announced so far. of the summer. But canceling student debt is still easier for some people with student loans.
What to do : Find out if you qualify. The American Rescue Plan, which became law in March, included a provision that all student loan forgiveness is tax-free until 2025. Previously, only borrowers in certain types of loan cancellation programs, such as a public service loan forgiveness program, did not have to pay taxes on the amount of debt forgiven.
The Department of Education has also streamlined the process so that people with a total or permanent disability can request the forgiveness of their loan. Talk to your loan servicer if you think you fall into one of these categories to make sure the new rules apply to you.
Consumer Reports is an independent, nonprofit organization that works side by side with consumers to create a fairer, safer, and healthier world. CR does not endorse products or services, and does not accept advertising. Copyright © 2021, Consumer Reports, Inc.
Consumer Reports has no financial relationship with the advertisers on this site. Consumer Reports is an independent nonprofit organization that works with consumers to create a just, safe, and healthy world. CR does not endorse products or services and does not accept advertising. Copyright © 2021, Consumer Reports, Inc.