COVID & College: Preparing for the Financial Aid Crunch

COVID & College: Preparing for the Financial Aid Crunch

August 04, 2021

Investing for college during and after COVID may be even more important than it was before. A college plan is essential at all times, but especially in these days of lingering COVID uncertainties and shrinking financial aid expectations. With free aid likely harder to come by and student debt already at unmanageable levels, many families may need to invest even more to pay their share of college costs.

Financial aid: An overlooked casualty of the pandemic

Like so much in life, college has felt the full brunt of COVID. The virus quickly shut down campuses last spring, resulting in billions in lost revenue.
Those losses mounted as enrollment declined for the fall 2020 semester, particularly among incoming freshmen uninterested in remote learning
and international students unable to travel. On the plus side, college costs posted some of their smallest increases in decades, with many schools
freezing or cutting tuition in an effort to recruit students.

Looking ahead to fall 2021, applications are up at elite universities and large state colleges but down at other institutions. One reason: Many big name colleges stopped requiring SAT/ACT scores during the pandemic, which encouraged students to apply to schools that might otherwise be
beyond their reach. This trend toward more selective and expensive colleges may just be beginning, as 70% of admissions directors say they plan
to remain “test optional” going forward.1

Overlooked amid these developments is the negative long-term impact COVID could have on financial aid. Even before the crisis, need-based
grants paid only a fraction of total college costs. In coming years, aid may fall further for two reasons.

Download our guide to learn more about changes to federal financial aid rules, financial challenges at colleges, and how you can invest more for college:

COVID & College Guide