Back-to-school planning during the pandemic

Bill Cass, CFP®, CPWA®

Bill Cass, CFP®, CPWA®, 08/19/20


Families can keep their educational goals for loved ones on track — even during 2020.

With costs rising at many colleges, the ability of families to save for the future becomes more important than ever. While navigating the changing school landscape for their children, families can still focus on planning and saving.

What has changed?

Early in the pandemic, hundreds of colleges closed their campuses and moved to online learning. By May, more than 1,100 colleges had virtual offerings.

Making these necessary adjustments due to the pandemic meant higher costs for colleges:

  • Increased cost of training and administration, i.e., new software for education
  • Overall reduced enrollment is likely to result in loss of revenue from tuition and fees, and room and board
      • Fewer out-of-state students returning to school
      • Fewer international students, due to visa and travel restrictions
Many colleges and universities had already been under financial pressure, and since March, more than half a dozen colleges have permanently closed. Some researchers expect that number to rise. Four-year colleges may lose up to 20% in fall enrollment, according to Simpson Scarborough, a higher education research company.

This fall, colleges will likely make additional changes to how education is delivered. Many schools have decided to keep campuses closed, with others expected to follow. Other schools are offering a hybrid environment that includes a combination of in-person and online curriculum.

Policy changes help families save

Prior to the pandemic, lawmakers passed tax reform and the SECURE Act, which included provisions to help families save for college. Policy changes make it possible for families to use 529 plan funds to cover tuition at private and religious-based primary schools, as well as for apprenticeships. Policy changes also allow families that used 529 funds to pay for tuition, to “re-contribute” any college refund to their 529 plan without taxes or penalty.

This year, the CARES Act included provisions to make it easier to pay student debt by establishing a six-month delay for federal student loan payments. These payments can be delayed through September 30, 2020, without penalty or interest accrued. Each month in which a loan payment is suspended is treated as a month that payment is made, for purposes of various student loan forgiveness programs.

Through an executive order, the White House extended the delay through the end of the year.

It’s not too early to start saving

Whether a child is just starting kindergarten or entering high school, it’s not too early to start planning for the future. Having a plan can help families stay on track. In challenging times, it is important to have a plan that is flexible, while also staying disciplined to continue saving consistently.

Consider seeking guidance from a financial professional and discuss options given the current environment.

Options may be reviewed at any stage:

Newborn: Continue to save for college costs through volatility, with plenty of time to let money grow through dollar cost averaging

High school: Explore the options for juniors and seniors to remain on track with their academic, resume-building, and work-related goals in an era of social-distancing and other limitations

College: Choose remote or in-person education and continue to earn credits. Most colleges are flexible with plans, and many offer tuition insurance. Be sure to communicate with the school regarding its policies for a gap year or transferring credits from other schools while the student takes a break

Take a break: If students aren’t comfortable attending college, they may choose to work. They can use the income to save for future college costs or participate in an internship or co-op program for credits, with or without pay, in their area of study

To get started with the planning process, read our investor education piece, “Early college planning for a growing family.”

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