JUN 30, 2020
Many high school students who were thrilled to get accepted to the colleges and universities of their choice earlier this year will need to change their plans and either choose a less costly option for higher education or skip this year altogether due to financial stress on their families brought on by the COVID-19 crisis.
Results of an annual survey by the Washington, D.C.-based College Savings Foundation found the economic damage to families who have been laid off or forced to deplete their savings during the pandemic is altering future higher education plans for many.
“The COVID-19 health crisis is causing many young people to change and adapt their plans; but we are heartened to learn that they continue to save, which will provide some stability in this period in their lives,” said Vivian Tsai, chair of the College Savings Foundation, a national nonprofit umbrella organization for 529 college savings plans, which are tax-advantaged investment accounts designed to encourage families to save for college.
Contributions to 529 plans are allowed to grow tax-deferred. Distributions from the accounts are not taxed if used to pay expenses for K-12 public, private and religious school expenses or higher education costs.
The foundation is a trade group for 529 plan program managers, state sponsors and financial services firms that manage such accounts. The nonprofit reports there are 14.5 million individual 529 plan accounts in the U.S. with a total of $371 billion in assets that families have set aside.
The financial pressure students are faced with showed up in a number of ways in the foundation’s recent survey of 1,024 high school sophomores, juniors and seniors.
More than a third — or 37% — said their post-high school plans will be readjusted to either attend community college to save on costs or take a gap year to get back on track financially. Prior to COVID-19, 43% of those surveyed planned on going to public college; 25% to community college; and 9% to technical college and career education.
Exactly one-third of all the students — 33% — said their family finances have suffered since the pandemic took effect, with more than half — 55% — saying a parent was laid off and will have less money saved for college; and 41% expecting to take on more student loan debt than they had planned.
For the past 11 years, the annual survey of high school students has always focused on asking young people how they intend to pay for college and how much they have saved.
In light of the pandemic, the organization created a new survey that sought information about how COVID-19 has affected their lives, their college plans, their college financing and even their career choice if they are able to look that far out.
One in five high school students said the pandemic has caused them to change their career plans. 31% will change their course of study to a health services field; 29% will consider fields where telework is a viable option and layoffs are less likely; 18% will change their course of study to a public safety field; and 11% will consider working for either state or local government.
“It’s interesting that all of those fields would guarantee them an income and the ability to provide for their families when they are older,” Ms. Tsai said. “That is probably because they have seen layoffs and furloughs occur in their own homes.”
Tim Grant: email@example.com or 412-263-1591.