Reimagining College Financial Planning in a Post-COVID World
Freshman year of college is a time for the unfiltered pursuit of knowledge and the dawn of a new chapter of life for most students. In this unprecedented global pandemic, families who have prepared seamlessly for twelve plus years are suddenly faced with a new reality and an uncertain future. Although times like this upset normal, traditional life, they also create opportunities to imagine a new future. For college students and the families that support them, reimagining this new future should be the necessary incentive to assess the important investment of a post-secondary education.
For many families, college is an expectation. Prior to the coronavirus outbreak, attending college immediately after high school was the obvious next step for most American students. According to EducationData.org, in 2017, about 67% of the approximately 2.9 million students who graduated from high school, enrolled in college that fall. As students drew closer to their senior year of high school, they were bombarded with questions like “what are your plans for next year?” and “what are you thinking of majoring in in college?” The high expectation for a college education led to the creation of dedicated supports to help students attain that goal. This also meant millions of students accepted the necessity of student loans to finance this dream.
This past year, my company, Adisa Advising, worked with some families to go through the college application process, and provided consulting on how to best assess the academic, social, and financial fit of colleges and universities. One takeaway from this experience was dealing with the exorbitant and still rising cost to attend four-year colleges and universities. According to the Federal Reserve Board, over half of young college graduates took on some debt for their education. Another report, the Trends in College Pricing Report, concluded that in 2019, the average amount borrowed by 2017-18 bachelor degree recipients who took out loans to pay for college was $29,000. In any other scenario, asking an eighteen-year-old to sign up for that amount of debt without proper financial counseling would be considered gross negligence. But in the past, that was the norm. It was just another day in the American Higher Education system.
Covid-19 has spawned a new and uncomfortable dawn in the halls of higher education. For all families, it is more critical than ever to plan and explore available options for the upcoming changes. It is important to do right by students by preparing them for the financial investment a college education entails. For all families, this is a critical period to spend time evaluating and planning for the financial impact of a college education. A critical analysis of the available data suggests that the path to higher education will look completely different moving forward, and it is, therefore, important to prepare for a post-coronavirus college decision. Below are three things to keep in mind about how higher education is changing, and how it will impact college costs moving forward:
1. College pricing may change. For Better or For Worse? No one knows.
Families should use this time to examine how their destination colleges and universities are adapting to this unprecedented uncertainty, and whether the price of college may look entirely different moving forward. Many schools have set tuition freezes in place, but there is no consensus on what the implications will be moving forward. It is important that families keep track of what colleges and universities are doing, and how it will impact such families in the future.
2. Expect More School Closures.
The financial impact of the coronavirus epidemic has impacted every higher education institution. Unfortunately, many schools that were already struggling with declining enrollment numbers, are on the brink of bankruptcy, due to the financial impact of closing. Be diligent in checking the financial viability of the schools on your list, and prepare to make changes to your college choice and plans if schools continue to struggle with fall enrollment numbers.
3. Colleges may have less money to provide services.
After the 2008 recession, many states saw budget cuts for higher education funding. Unfortunately, when states cut higher education funding, colleges adapt to the blow by raising tuition, and funding for campus projects may be delayed or canceled. Colleges may scale back on their expenses, and things considered “non-essential” such as constructing new campus buildings and recruiting more faculty, may be delayed indefinitely.
Although many of the things listed above suggest a bleak outlook for the future, a good news story coming out from this pandemic is that colleges are going the extra mile to support students. Colleges understand the economic impact that many families are dealing with right now and are trying their best to help students navigate this trying time. Moving forward, it is important that families spend more time thinking about what the future of college attendance may look like, and how best to prepare financially for a new normal. College is an incredible financial investment, and for too long, we may not have done due diligence in preparing effectively for it.
During this lockdown period, I'll be offering a collaborative Working Group for parents to explore resources for their children's college planning, weighing their options, and taking affirmative steps to deal with the new reality. Learn more Colearn.Club/Working-Groups