Coronavirus affects college financial aid — here’s how
The coronavirus pandemic has had a profound impact on the lives of current and future college students. Schools have switched to online-only education and college campus visits have been interrupted for graduating high school seniors.
Amid the turmoil, it's important to consider how the COVID-19 crisis will affect college financial aid and loan programs for students. Here's important aid information students need to know right now.
Can current students keep their financial aid?
To remain eligible for financial aid, students are typically required to attend school at least half-time. The Department of Education has urged students to contact their schools to clarify their policies, but most schools are offering online instruction so enrolled students can complete their coursework and continue to meet this requirement.
Students whose schools have changed to grading on a pass/fail basis amid stay at home orders will also be classified as making satisfactory academic progress for purposes of financial aid eligibility. However, when distance learning is not possible and students drop below half-time enrollment, this could trigger a loss of eligibility for federal aid as well as start the clock on the grace period before payment comes due.
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For students receiving money from work-study but who can't work due to COVID-19 closures, the Department of Education policy allows schools to pay students who have started their work -- although school policies on when and how payments are made can vary. Some schools are paying students for all scheduled hours even if they cannot work them while others are setting up a process where they can work remotely or will receive partial payments.
Students who lived on campus may also be entitled to a room and board refund, although some schools are under fire for offering only credits or providing just a small amount of money back. And those whose aid covers housing may get no refunds at all.
Because policies do vary by academic institution, talking with the school's financial aid office is the best course of action.
Some students could increase their financial aid
Not only can most students continue receiving financial aid as long as they complete online coursework, but it's also possible that some will have their financial aid funds increased. This could happen if COVID-19 has resulted in unemployment or a reduction in income for parents who were previously making financial contributions. Families faced with high medical bills could also be entitled to additional help in paying for school.
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The best option for those whose situation has been affected by coronavirus is to contact the financial aid office at their school immediately. College financial aid administrators can facilitate a financial aid appeal or special circumstances review in situations where there's been a major change in circumstances such as a job loss, illness or divorce. This can involve updating information on the Free Application for Federal Student Aid (FAFSA) and making an adjustment to the aid that's available.
Student loan borrowers are getting relief amid coronavirus
Those who are currently in repayment are also getting help from the government, as the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act provides for forbearance for all borrowers with federal student loans.
Students will have their payments automatically paused from March 13, 2020 until September 30, 2020 and no interest will accrue during this time. Those who wish to do so can continue to make payments during the period of administrative forbearance and the full payment amount will go towards reducing principal. This can make student loan repayment faster and reduce the total cost of borrowing. There is also the potential for this moratorium on payments and interest to be extended depending on economic conditions in October.
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The CARES Act only provides relief for borrowers with federal student loans, unfortunately. Those with private loans will need to reach out to their creditors directly if they are struggling to make payments. Many private lenders are working with their borrowers to put payments into forbearance or make other arrangements.
Unfortunately, interest will continue accruing on private student loans even in cases where a lender allows struggling borrowers to temporarily stop making payments during the COVID-19 crisis. While some borrowers may have no choice but to pause payments, they'll be left with a higher amount to repay once the pandemic is over and they've returned to work.