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COVID-19 and College Education: The Eye-Opening New Reality of Saving for College

There are over 18 million university students. While college is an exciting (yet stressful) time in many students’ lives, students are enduring a weird time.

The COVID-19 pandemic is sweeping the nation. Since this virus is easily transmittable, colleges are forced to halt education and move classes online. Now, college students have to return to campus in the fall with COVID cases still spreading.

COVID-19 is affecting more than our health and our education. Since businesses have to close, the job market is scarce. This makes saving for a college fund even more difficult and unpredictable, forcing many students to take on larger student loans.

Don’t worry, you still have options. Here’s how to save for your college fund during the COVID-19 pandemic.

Financial Aid

Financial aid is a funding program that is available for students during their post-secondary education. This funding covers many aspects of education, such as tuition.

If you already have financial aid or completed the Free Application for Federal Student Aid (FAFSA), your college will help you access funding.

If you plan on attending college next year, you should fill out FAFSA soon to ensure you’re eligible. As of now, the application time started October 1, 2019, and is ending June 30, 2021.

It’s also recommended you contact your school for their recommendations and advice on filling out FAFSA.

Federal Emergency Grants

The CARES Act provides higher education relief for qualifying students. This relief handles campus disruptions due to the coronavirus. This includes tuition, housing, food, technology, course materials, child care, and health care.

To qualify, you must meet these requirements:

  • Have a valid Social Security Number or Tax ID Number
  • Be a U.S. Citizen or Eligible Noncitizen
  • High school diploma, GED, or home school completion
  • Registration with the Selective Service System (if the student is male)

Click here to learn more about higher education relief under the CARES Act.

What to Keep in Mind When Accepting Funds and Grants

These funding options are available to make paying for college easier and to decrease your debt. But there are some things that all students must know.

Amounts May Vary

The amount of money you receive depends on the college you attend. Colleges will receive a certain amount of funds for their students based on enrollment numbers.

Some colleges give their students equal funding while others base funding amounts on eligibility. Your college may give you more or fewer funds based on family income, course credits, and educational expenses.

If you have banking, colleges will usually distribute these funds via direct deposit. But some may also hand out checks if required.

You May Have to Apply

All eligible students have to send FAFSA to receive financial aid. But what about grants from the CARES Act?

This depends on the college. Some may distribute funds based on the data that students already provided or even by the information on their FAFSA. Or some colleges may require students to fill out a separate application.

Some colleges may also do both. They will immediately push out funds to eligible students and will offer applications to others who don’t have any funding.

What can you expect from this application? The application will ask you questions such as your ability to afford food and other common expenses, if you’re receiving any financial aid, if you have children, if you have housing expenses, and more.

What If You’re Not Eligible? Your Other Options

Financial aid and CARES Act grants aren’t your only funding options, such as the ones mentioned on this page. Keep in mind, some of these options are only for parents of children that plan on attending college.

Here are other ways you can earn and save money for your college fund.

529 Plan

A 529 plan is a tax-advantaged college savings account that lets parents save money for their child’s college fund. While the 529 plan lets parents pause their contributions, many parents are putting more money toward their child’s 529 plan because they’re not spending money like they usually do.

UTMA or UGMA (Uniform Transfer/Gifts to Minors Act)

This is a savings account in a child’s name and is controlled by their parent or legal guardian. These accounts aren’t only used for educational purposes. Once the child reaches the age of 21, they can use the money however they want (hopefully they use it toward education).

Education Savings Account (ESA) or an Education IRA

This is another savings account option for parents. You can save $2,000 per year (after taxes) per child. There are also a variety of investment options so you may receive a higher rate on your return. The best part is you don’t have to pay taxes on this account.

Keep in mind, these savings accounts require that parents fall in a specific income limit to qualify. The beneficiary must also use these funds by the time they reach 30 years old.

Tax Refunds

If you received a tax return recently, it’s recommended you save that money and use it toward your education or other important future expenses. You can also use bonuses from your job and inherited money.

Apply for Scholarships

Now is the perfect time to apply for scholarships. You receive funds and you don’t need to pay them back. You can find a scholarship for different purposes, such as excellent academics, athletics, and even extracurricular activities.

Search for different scholarships you may be eligible for. Even small scholarships are better than nothing.

Save for Your College Fund

The COVID-19 pandemic is causing many setbacks, including for education.

Whether you’re a student or a parent, there are still many savings options to grow your college fund. Most students will take advantage of funding and grants, but these have specific eligibility requirements.

There are also certain savings accounts, scholarships, and other ways to save such as using tax refunds.

It’s still recommended you contact your school for more information on paying for education expenses during the COVID-19 pandemic.

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