Covid19

Posts

COVID college costs

College Costs in the Era of COVID-19

,

Paying for College in the Era of COVID-19

This semester, millions of students, teachers, and college administrators are having to deal with a radically changed landscape while still managing college costs. At many institutions, classes have been cancelled or moved online. Sports programs have been suspended and dormitories, libraries, and labs shuttered. In fact, traditional campus life has been turned upside down thanks to COVID-19, and it’s unclear how long it will last.

Meanwhile, the cost of a college education is higher than ever. According to the College Board, the average total charges at four-year public colleges (in state) for the 2019-2020 academic year were $21,950. Average costs at four-year private nonprofit colleges were more than double that ($49,870).1 And while increases in costs have moderated in recent years, they continue to outpace inflation and median household income, resulting in a growing dependence on student loans; the average student borrower graduating in 2018 owed about $29,000.2

For cash-strapped students and parents, the current crisis has tipped the scales. Many are rebelling at the high costs in the face of a severely diminished college experience. Others have decided to wait until the crisis has passed before enrolling. Still others are questioning the very value of a college degree under current circumstances.

But the issue of soaring college costs is hardly new, and there are two sides to consider.

Students and Parents: Give Us a Break!

“We are paying a lot of money for tuition, and our students are not getting what we paid for,” comments one California parent, incensed at paying in-person prices for education that has moved online. On-campus facilities and services like computer labs, libraries, and networking opportunities have also been severely diminished by closures.

Already suffering from a pandemic-induced recession, many families are feeling the pinch and want relief. Students in particular have been hard hit with furloughs and layoffs, as many rely on retail service jobs to help them get by — the same jobs that have suffered the most in the face of closures and lockdowns. Many students had also signed leases for off-campus housing and are now stuck with them even if classes are cancelled. In short, students and parents are demanding tuition rebates, increased financial aid, reduced fees, and leaves of absences to compensate for what they feel is a diminished college experience.

Colleges: How Can We Manage?

Meanwhile, colleges and universities are taking a major financial hit from the pandemic. Enrollment is down. International admissions and offshore semesters have been halted. Entire programs have had to be suspended for health reasons. What’s more, substantial resources are required to set up an online curriculum, administer the courses, and train educators. There are also major costs involved with constant COVID testing of students and disinfecting of classrooms, offices, and other facilities. And, colleges must continue to pay existing vendor contracts, maintain facilities, and compensate their own staff. The situation has created an existential crisis among smaller colleges, who lack the endowments and funding of larger institutions. For many, it’s a question of survival.

A Mixed Response to Managing College Costs

Given this predicament and the widely varying circumstances faced by different institutions, it’s no surprise that their responses vary widely. A handful of universities have announced substantial price cuts. Some have cut fees. But most have kept prices flat, and a few have even increased them. While many offer refunds of fees and room and board, the reimbursement policies vary from school to school — and nearly all have drawn the line at tuition. Here’s a sampling of actions taken — or not — by different schools:

  • Full or partial refunds for room and board costs
  • Reduced tuition and fees
  • Discounts in the form of scholarships or loans
  • Renegotiated financial aid packages
  • Frozen tuition at previous year’s level
  • Imposition of “COVID fees” to cover added costs
  • Increased tuition to cover added expenses

Which of these actions a given school takes depends largely on its financial health and reputation. Smaller, private colleges with more at stake are generally offering more in the form of relief. Larger, well-endowed institutions, such as the Ivy League colleges and large state schools, trend toward the status quo. But there are many exceptions, and each institution has its own approach.

What Can You Do?

If you are a student or parent seeking compensation or relief, your options are limited, especially for the current semester. At nearly all institutions, tuition reimbursement is almost nonexistent after several weeks, no matter what the circumstances. Some schools are now offering tuition insurance, but coverage typically applies only when a student withdraws for medical reasons. To find out what relief may be available at your school, contact the registrar.

Alternatively, you can join the thousands of students and parents who have signed petitions or filed lawsuits demanding tuition cuts, housing reimbursements, and more. Check online to see if any such actions may be already in the works at your school.

In the end, like so many other issues arising from the pandemic, the current predicament facing students and schools is likely to be with us until a COVID-19 vaccine is in place. Even then, skyrocketing costs and mounting student debt pose longer-term issues. Any resolution will take time and likely have far-reaching implications for the costs and nature of a college education.

Notes:

1The College Board, Trends in College Pricing 2019.

2The College Board, Trends in Student Aid 2019.

                                                                                                                                                                            

This material was prepared by LPL Financial. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that they views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. All performance referenced is historical and is no guarantee of future results.

estate plan

Your Estate Plan: Time for a Checkup

,

Your Estate Plan: Time for a Checkup

COVID 19 has brought tragedy to many families and businesses and impacted personal finances. It has also rendered many an estate plan inaccurate and unrepresentative of current circumstances. If you, your family or your beneficiaries have been affected by the virus, you may need to review and make changes to your plan. Consider the following questions in your review.

Are your beneficiary designations still accurate?

If you have lost someone named in your estate plan, you’ll need to make the appropriate changes. This could include changing beneficiaries, trustees, executors, healthcare decision-makers, your legal power of attorney or any other parties named in the plan.

You’ll also want to ensure that your beneficiary designations are up-to-date for your retirement accounts, such as an IRA (Individual Retirement Account) or 401(k), where beneficiaries are designated directly, rather than through your will.

Has the size of your estate changed?

If you have taken a financial hit as a result of the pandemic, then you may need to adjust some aspects of your estate plan. Adjustments may also be needed if the size of your estate has increased significantly. A large change in the total value of your assets could affect the distribution of your assets, particularly if you have made specific bequests to individuals or charities rather than dividing your estate proportionally. If you own a business, you may also need to consider how its value may have changed and how that might impact your plans to pass on control.

Are your minor children still protected?

If you have named a guardian for your minor children, check to ensure that person is still willing and able to serve in that role. And ask yourself if you still have confidence in your choice of guardian. A different job, a move out of state, or other changed circumstances may make your original choice no longer optimal.

In addition, it may make sense to keep the financial responsibilities of guardianship separate from the actual care of the minor children. You could choose a professional fiduciary to provide financial management on behalf of the minor children and name a family member to provide their actual day-to-day care.

Is your life insurance coverage still appropriate?

If your circumstances have altered materially as a result of the pandemic, you may also want to take a look at your life insurance coverage, too. Any significant changes to your life — births, deaths, marriages, or divorces — could affect your life insurance needs. It’s important to ensure that you have adequate coverage for you and your loved ones.

Do you have up-to-date documents?

Any updates needed as a result of your review will need to be reflected in your estate documents. These typically include a will, healthcare proxy, and power of attorney. They may also include a living will or trust documents. Keep in mind, however, that estate planning can be a complex endeavor. Therefore, any estate planning decisions or changes are best made with the help of a qualified legal professional and the rest of your professional team.

 

This material was prepared by LPL Financial. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that they views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.