CSF Type: Education

COVID-19 Impacts Higher Ed Plans, Career Paths and Financing According to Survey of Parents by College Savings Foundation

Half of parents balk at full tuition for online courses; 89% want discounts

Washington, DC, September 18 – For students and their families heading to higher education this fall, COVID-19 has made a mighty impact on their education paths, their career plans and their financing decisions. A survey of nearly 1,000 parents across the country found that one-third (34%) of their college-age children had changed their career plans; and 30% had altered the kind of higher ed institution they planned to attend – with most of those attending public rather than private college, going to a community college rather than a 4-year school, or taking a year off entirely.

“The COVID-19 pandemic has upended what higher education looks like for students across the country; and now parents are adjusting their expectations in terms of how their children are learning and what they are paying for,” said Vivian Tsai, Chair of the College Savings Foundation, the nonprofit helping American families save for higher education that conducted the survey.

This is the 14th consecutive year that CSF has surveyed parents, but the special 2020 Survey of Parents during COVID-19, released during College Savings Month, focused solely on parents of students who had just graduated high school or were already enrolled in postsecondary education or training.

The vast majority of students – 87% – will be either completely online (47%) or a mix of online and in-person learning on campus (40%). More than half (51%) of all parents said they were not willing to pay full tuition for remote classes and an overwhelming 89% said that traditional, in-person universities should discount tuition if classes are offered only online.

A stark backdrop to these findings is the effect of COVID-19 on families’ income. The majority of parents, 53%, said that one earner had lost a job or had work hours reduced and almost 8% had a “catastrophic” experience with all sources of income lost; only 40% were unaffected by COVID-19..

Despite these challenges, two-thirds of parents exhibited sound higher education funding strategies, with 28% saving for many years and 37% having some savings, “although not enough.” Overall, 23% of all parents surveyed invest in 529 higher education savings plans for their children, yet only 41% of all parents know that they can also use 529 plans to pay student debt.

Parents also said they were avoiding debt in paying for their child’s higher education: 48% said they weren’t taking out loans, with 53% of those explaining that they do not want to take out debt in this economy and 20% saying they do not think debt for education is a good idea ever.

“We are heartened to learn that families have maintained sound savings strategies that support their children’s higher education goals during a changing and challenging environment,” Tsai added.

The following is a snapshot of what families said about their children’s plans as of the first week in September 2020:

Higher education plans:

  • 45% of students currently plan to attend public 4-year college or university, 19% private 4-year college or university, 20% attending community college, 7% career or technical program, 2% an apprenticeship and 8% none.
  • This represented a change for 30% of the families, with 28% of those going to public rather than private college, 27% going to community college rather than a 4-year school, 26% taking a year off, and 11% going to a career/technical/trade school or apprenticeship.

Career plans:

  • 34% of parents said their children were changing their career plans, with 26% of those now interested in health services (doctor, nurse or medical worker), 21% now interested in public service (first responder, state or local government, public health, urban planning and design); 17% going into career/technical/trade program because it is essential work and 16% going into the same due to reduced costs of the program.

Online vs. in-person learning:

  • Two-thirds of parents (66%) said they would follow the school’s plan of online, in-person or a combination. The remaining 34% of parents changed their plans because their child was not attending for health concerns, they were unwilling to pay for online learning and lack of a social experience, or their child was not able to attend due to the financial effects of COVID-19 on their family.
  • For those families with a change in plans, here’s how their plans changed: 38% will stay with the same school but attend online from home; 26% will take a year off; 18% will switch to community college online or in-person and 18% will transfer to a less expensive school.

The CSF 2020 Survey of Parents during COVID-19 was conducted with 952 parents across the country and income brackets via Survey Monkey. The College Savings Foundation (CSF) is a Washington, D.C.- based not-for-profit organization helping American families achieve their education savings goals. featured findings from CSF’s Youth Survey of High School students and quoted Vivian Tsai on the impact of COVID on their higher ed plans.


More than half of students probably can’t afford college due to Covid-19

Jessica Dickler @JDICKLER

With millions of Americans now out of work, one expense is suddenly out of reach for many: higher education.

More than half, or 56%, of college students say they can no longer afford their tuition tab, according to a survey by OneClass, which polled more than 10,000 current freshmen, sophomores and juniors from 200-plus colleges and universities across the country.

Just about half of all undergraduates said they need to figure out a new way to pay for school because of the impact of the pandemic on their financial standing, the report found.

Further, nearly 7% of students have already had to unenroll to find full-time employment or alternative education options, OneClass found.
For years, college costs have only gone up as incomes failed to keep pace.

Now with unemployment spiking to levels not seen since the Great Depression and hiring freezes instituted across industries, college affordability is particularly strained.

Already, nearly 40% of parents have tapped their child’s college fund to help cover expenses due to economic fallout from the pandemic, according to another survey by LendingTree. 

In addition, dramatic market swings have taken a toll on college savings account balances. Total 529-plan assets fell to $293 billion in March after hitting an all-time high of $328 billion in December, according to Morningstar.

A separate poll by of high school seniors entering college in the fall also found that 69% of parents and 55% of students said Covid-19 impacted their ability to pay for school.

Families with another year or two before college reported feeling better positioned to weather the downturn, but still, more plan to borrow than rely on income and savings.

Among high-school sophomores, juniors and seniors, roughly one-third, or 33%, said that Covid-19 is affecting their higher education financing, according to a separate survey by the College Savings Foundation, which polled more than 1,000 students in the U.S.

More than half said a parent was laid off and will have less saved for college, and 41% expected to take on more debt.

Typically, 7 in 10 college seniors graduate in the red, owing about $30,000 per borrower, according to data from the Institute for College Access & Success.

Going forward, a 2020 high school graduate could face $37,200 in loans in pursuit of a degree at a public college or university, according to a new NerdWallet analysis of data from the National Center for Education Statistics.

“The Covid health crisis is causing many young people to change and adapt their plans,” said Vivian Tsai, chair of the College Savings Foundation. 

About 39% of the high school graduating class of 2020 said that economic uncertainty due to Covid-19 will affect their decisions about higher education, the College Savings Foundation found.

As a result, 36% now plan on attending community college to save on costs, up from 28% pre-pandemic, and 15% will go to a public rather than a private college. Another 27% plan to take a gap year to get back on track financially.

Altogether, 55% of the students polled said the pandemic will impact the rest of their lives.

College Savings Foundation Survey of High School Students Finds COVID-19 Changes Higher Education Plans and Financing

55% of seniors, juniors and sophomores across country say pandemic will impact the rest of their lives

Washington, DC, June 4 – The economic uncertainty of COVID-19 is altering the future of higher education for a swath of high school students across the country. College Savings Foundation’s (CSF) survey of over 1,000 sophomores, juniors and seniors has found that at least a third of them will change both their plans for higher education and how they will finance it.

Completed in early May, the survey provides a variety of insights into the impact of the global health crisis on young people. For example, nearly one-in-five students say their experience with the pandemic will affect their career plans; over half, 55%, say that the experience will impact the rest of their lives.

“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 of their lives,” said Vivian Tsai, Chair of CSF, a national nonprofit helping American families save for higher education.

Nearly half of all students, 48%, are saving for higher education costs. Three quarters (74%) said their parents were saving as well, with 25% of those saving primarily in a 529 higher education account.

Students are feeling financial pressure due to the crisis, which showed up in a variety of ways:

  • Higher Ed plans: 37% of students said their post-high school plans will change, with 40% of those now planning on community college to save on costs, and another 25% taking a gap year to get back on track financially. Prior to COVID-19, 43% planned on going to public college, 25% to community college, 15% to private college, 9% to technical and career education, with 2% to an apprenticeship, and 6% other (such as military).
  • Higher Ed financing: 33% of all students said that COVID-19 is affecting their higher education financing, with 54% of those saying that a parent was laid off and will have less to save for college, and 41% expecting to take on more debt.
  • The effect of stock market: 34% said the decline had affected their parents’ savings accounts, with half saying that this would affect their future plans in a variety of ways.

The importance of saving emerged in a larger question on the pandemic. Of the 55% who said COVID-19 would impact the rest of their lives, the top two answers were that 62% would be more aware of personal and public hygiene, crowds and personal space, and 28% would be more aware of personal finances and the need to save and prepare for economic disruption.

The survey also provided a snapshot of how students are experiencing COVID-19’s impact:

Remote learning and graduations:

  • Almost all students (97%) surveyed had their schools closed with 91% of those closed through the rest of the school year; 92% are taking online classes.
  • Graduation plans were in flux at the time of the survey: 19% planned virtual graduations, 21% were not holding graduations, and 53% were still undecided.
  • The majority of those students (54%) said that while they understand the need to have social distance, they were sad to not have the ceremony; 37% said the ceremony should happen when the emergency is over.

Social distancing and quarantines:

  • 22% of students said that social distancing and self-quarantining would change their plans for higher education.
  • Of those, two categories stood out: 41% are more likely to attend a higher education institution closer to home and 28% are more likely to start at a local community college and then transfer to a 4-year college later.

Students’ career plans:

  • 19% of high school students said it likely would affect their career plans. Here’s how:
    • 31% would change their course of study to a health services field.
    • 29% will consider fields where tele-working is a viable option and layoffs are less likely.
    • 18% will change their course of study to a public safety field.
    • 11% would consider work in the public sector – state or local government.
  • A separate question found that, of that 19% thinking about changing career plans, nearly half (49%) said being a healthcare worker would be most appealing, followed by 16% finding emergency services/firefighter positions appealing.

Seniors Section

CSF took a special look at the high school graduating class of 2020 who are most immediately experiencing the effect of COVID-19 on their graduation and higher education plans. Here are key findings:

For the 92% of seniors who will have a virtual graduation (20%), no graduation (16%) or whose school was undecided (55%):

  • 66% said that they understand the need to social distance, but are sad not to have the ceremony
  • 21% said they thought the ceremony should happen when the emergency is over.
  • 8% thought the school should hold it no matter what.
  • 5% answered “Other.”

Post-Graduation Plans:
Prior to COVID, here were seniors’ plans:

  • 38% – Public College
  • 28% – Community College
  • 18% – Private College
  • 8% – Technical and Career Education
  • 2% – Apprenticeship Program
  • 5% – Other

How and Why Seniors’ Plans Changed:

Plans for Higher Ed:
39% of seniors said that economic uncertainty due to COVID-19 would affect their post-grad plans. Of those:

  • 36% would go to community college to save on costs.
  • 27% would take a gap year to get back on track financially.
  • 15% would go to a public rather than a private college.
  • 10% would pursue a trade or technical certification.
  • 12% Other

26% of seniors said that the COVID-19 response (self-quarantining and social distancing) would change their plans. Of those:

  • 37% are more likely to attend higher ed institution closer to home.
  • 27% are more likely to start at a local community college and then transfer to a 4-year school.
  • 24% will take a gap year.
  • 7% will pursue a trade or technical training.
  • 5% Other

Financing for Higher Ed:
35% of seniors said that economic uncertainty due to COVID-19 affected their higher education financing plans. Of those:

  • 51% had a parent laid off and would have less saved to pay for college.
  • 43% will take on more debt to cover the costs of education.
  • 6% Other

Career Plans:
19% of seniors said that COVID-19 would change their career paths. Of those:

  • 31% would change their course of study to health services field.
  • 26% would consider fields where tele-working is a viable option and layoffs less likely.
  • 21% would change their course of study to public safety field.
  • 7% would consider work in the state or local government.
  • 15% Other

When asked what is most appealing, this group said:

  • 51% Healthcare worker (nurse, doctor, medical technician, healthcare administrator)
  • 19% Emergency services/Firefighter
  • 10% Police officer
  • 7% Public Policy/Urban Management
  • 12% Other

The CSF Survey of 1,024 High School students during COVID-19 was conducted via Survey Monkey with parental approval.

Infographic of how COVID-19 has changed the lives of High School Students If you used 529 plan to pay for college and got a refund, will it be taxed? CSF Chair Vivian Tsai answered questions from The Star-Ledger in New Jersey, on college refunds on expenses paid from 529s.

Posted Apr 12, 2020

By Karin Price Mueller | NJ Advance Media for

When colleges across the country started to shut down their dorms and cafeterias because of the coronavirus outbreak, families received partial refunds for housing and meal plan costs.

But what if you used a 529 plan to pay your college student’s bills? Could getting money back because of the coronavirus, when it’s from a tax-advantaged account, lead to an unexpected tax bill?

We took these questions to Vivian Tsai, chair of the College Savings Foundation, a nonprofit that helps families save for college.

Q: Can we put the refunded money back in a 529 plan?

A: Yes, if you have received a refund of tuition, housing or meal plans — or any other qualified higher education expense — from a community college, college or university, that was originally paid out from your 529 account, you may re-contribute those funds tax- and penalty-free to any 529 plan/qualified tuition program for the same beneficiary.

Generally, the re-contribution must be made within 60 days of the refund date. However, under temporary IRS guidance issued as a result of the health crisis, if that 60-day period ends on or after April 1, 2020, and before July 15, 2020, then the re-contribution can be made any time before the later of July 15, 2020, or 60 days after the refund date.

Q: What legislation allows this?

A: 2015’s Protecting Americans From Tax Hikes (PATH) Act added a special rule for a beneficiary of a 529 plan, usually a student, who receives a refund of tuition or other qualified education expenses.

This can occur when a student drops a class mid-term — or in circumstances like today’s global health crisis.

If the beneficiary re-contributes the refund to any of his or her 529 plans within 60 days, the refund will not be subject to penalties or taxes.

Under temporary IRS guidance issued as a result of the health crisis, if that 60-day period ends on or after April 1, 2020 and before July 15, 2020, then the re-contribution can be made any time before the later of July 15, 2020 or 60 days after the refund date.

Q: How does it work?

A: Fund re-contributions may be made directly into any 529 plan/qualified tuition program for the same beneficiary.

Q: What normally happens if more than 60 days has passed?

A: Account owners have 60 days from the date of the refund to re-deposit the 529 funds and not see taxes or penalties on those funds. If more than 60 days has passed, then the account owner (or beneficiary) will be subject to taxes and any penalty on the earnings of that distribution which would now be considered “non-qualified” expenses.

(As noted above, those deadlines have changed because of the coronavirus pandemic.)

Q: Should people put the money back in a 529 plan, or should they just use it for fall college expenses?

A: 529 plans provide a convenient way to earmark college savings funds away from family’s day-to-day expenses, and many come with cash-like or money market investment options.

Since the re-contributed funds will all be treated as new contributions under IRS guidance, it might make sense to put the funds back.

However, if the beneficiary is returning to college in the fall or will be paying invoices in the next few months, or will have use for the funds in this tax year, then it might make sense for them to keep the funds outside the 529 plan.

Again, it may make sense to check with your financial advisor or a tax professional. How to avoid a tax problem if you get a refund from your college for spring semester. CSF was quoted in this story about college refunds when paid from 529s.


How to avoid a tax problem if you get a refund from your college for spring semester


Jessica Dickler@JDICKLER

If you got a refund from college for room and board or other expenses, consider yourself lucky. But beware of the potential tax bite.

As colleges and universities across the U.S. remain closed in an effort to slow the spread of Covid-19, refunds for meals or housing have varied from school to school.

Still, when it comes to what you should do with a reimbursement check, there is little discrepancy.

If that money was originally paid out from your 529 college savings plan, you should re-contribute those funds to the same qualified tuition program, according to the College Savings Foundation.

That way, it will remain tax- and penalty-free.

If you don’t put the money back in your 529, it could be considered a non-qualified distribution, which comes with a 10% tax penalty in addition to income taxes on the account’s earnings.

That could add up, considering the average annual cost of room and board at public colleges is $11,500 and nearly $13,000 at private schools, according to the College Board. 

“This might cause some confusion if people aren’t familiar with the process,” said Lawrence Sprung, president of Mitlin Financial in Hauppauge, New York.

And in the case of college refunds, that could be everyone, he added. “I’ve never heard of anybody that’s gotten a check back before, this is a first.”

These 529 plans have become increasingly popular as a college savings tool, particularly because of their tax advantages. Total investments in 529s jumped nearly 20%, to a record $371.5 billion last year, according to the College Savings Plans Network.

If the money deposited back in 529 leaves a balance beyond what is needed to pay for school, any funds left over can be used for education expenses down the road, whether that is next semester or for post-undergraduate studies at a later date, Sprung said.

Money still left in a 529 plan can also be transferred to a sibling or even saved for a grandchild.

In any of these scenarios, “I would highly recommend keeping statements and a paper trail to effectively show the money that was returned to you and how it was handled,” Sprung said.

Subscribe to CNBC on YouTube. Don’t Forget About Taxes If You’re Expecting A Refund Of College Tuition And Fees. CSF is cited in this column on how to process college refunds.

Kelly Phillips Erb Senior Contributor

April 30, 2020

Every Friday evening, my husband’s college friends have a Zoom happy hour: it’s practicing social distancing and being social at the same time. The conversations have been dominated, of late, by the COVID-19 pandemic and how it’s affecting our families. One popular gripe? College tuition and room and board.

During the pandemic, students are being sent home from college, and some classes are being canceled. That means students are left with semesters cut short or a move to online courses, leaving unused or barely touched housing and meal plans. Schools are dealing with this in different ways. Some are offering partial tuition and fee refunds, while others are choosing to keep fees intact, suggesting that the underlying expenses (like administration and the costs of paying faculty) haven’t really changed.

According to Inside Higher Ed, 90% of parents with children already enrolled in college say they are not “comfortable” with the current landscape. That number ticks up a little – to 93% – for parents of students attending private institutions. Of those, 47% expect a “meaningful reduction in price.”

Mark Kantrowitz, publisher of, reports that about 70% of colleges are offering refunds. The refunds are typically 40%-60% of the room and board cost for the spring semester.

For those parents who are fortunate enough to get a partial refund of tuition and fees, there are some potential tax traps. Let’s start with the obvious: tax deductions and credits.

  • The tuition and fees deduction was extended to cover qualified education expenses paid in 2018, 2019, and 2020. The tuition and fees deduction is based on qualified education expenses used to pay for yourself, your spouse, or your dependents. It’s an above-the-line deduction, which means that you can claim the deduction even if you don’t itemize. For the 2019 tax year, the deduction is allowed for qualified education expenses paid in 2019 for an academic period beginning in 2019 or in the first 3 months of 2020. You only can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws.
  • The Lifetime Learning Credit (LLC) offers up to $2,000 for qualified education expenses paid for all eligible students per return. In other words, the LLC is limited by return, not by student. Like the tuition and fees deduction, the LLC is based on qualified education expenses you pay for yourself, your spouse, or your dependents. Similarly, the credit is allowed for qualified education expenses paid in 2019 for an academic period beginning in 2019 or in the first 3 months of 2020. For example, if you paid $1,500 in December 2019 for qualified tuition for the spring 2020 semester beginning in January 2020, you may be able to use that $1,500 in figuring your 2019 credit. You can claim the LLC for qualified education expenses not refunded when a student withdraws.
  • The American Opportunity Credit (AOC) offers up to $2,500 for each qualifying student on your federal income tax return. Unlike the LLC, that means you can claim the AOC for each qualifying student on your federal income tax return. It’s also partially refundable. Like LLC, the AOC is based on qualified education expenses you pay for yourself, your spouse, or your dependents. The credit is allowed for qualified education expenses paid in 2019 for an academic period beginning in 2019 or in the first 3 months of 2020. And as before, you can claim the AOC for qualified education expenses not refunded when a student withdraws.

According to the Internal Revenue Service (IRS), a refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year.

  • If you receive a refund after 2019 of qualified education expenses paid on behalf of a student in 2019 and the refund is paid before you file an income tax return for 2019 (remember, Tax Day has been moved to July 15), the amount of qualified education expenses for 2019 is reduced by the amount of the refund. 
  • If you receive a refund after 2019 of qualified education expenses paid on behalf of a student in 2019 and the refund is paid after you file an income tax return for 2019, you may need to repay some or all of the credit. 
  • But if you pay qualified education expenses in both 2019 and 2020 for an academic period that begins in the first 3 months of 2020 and you receive a refund, you may choose to reduce your qualified education expenses for 2020 instead of reducing your expenses for 2019.

You should also pay attention to the source of the funds. If you’re paying as you go from already-taxed funds, or from loans, there’s typically no tax impact to you when you receive a refund. But if you receive a refund of funds that you originally paid out of a tax-favored account, there may be tax consequences.

If you return money from a 529 college savings account to the account – for the same student – it remains tax-free. Generally, the money has to be put back within 60 days of the refund (that’s the result of the PATH Act). But the IRS made clear in Notice 2020-23 that if the 60 day period ends between April 1, 2020, and July 15, 2020, you can stretch the return of the contribution to July 15, 2020. 

The College Savings Foundation warns that refunds of money that originated from a 529 plan could be subject to federal and state taxes and penalties if it remains outside of the plan and is not used for qualified educational expenses. If you don’t return the funds to the account, they could be considered non-qualified distributions and subject to tax and a 10% tax penalty. But if you’re headed back to school this year, you may want to hold onto the money: check with your financial advisor or a tax professional for more info.

There’s additional tax relief for families who qualify for grants and other free money. Students who receive emergency financial aid grants under the Coronavirus Aid, Relief, and Economic Security Act (or CARES Act) qualify for tax-free treatment under section 139 of the Tax Code. And you already know that some students may be eligible for the Economic Impact Payments (EIP), or stimulus checks: those are tax-free, too.

Should college savers opt for student loans this fall?

By RYAN LANE of NerdWallet

CSF Chair Vivian Tsai was quoted in this Associated Press story from Nerdwallet on how families can think about their 529 savings in fast-changing financial markets.

In this June 20, 2019, file photo students walk around a RAMS sign at Virginia Commonwealth University in Richmond, Va. Families with 529 college savings plans may have seen their totals tumble due to recent economic events caused by the coronavirus pandemic.But that downturn also has interest rates on undergraduate federal student loans potentially decreasing to less than 3%, the lowest rate in more than 15 years. (AP Photo/Steve Helber, File)

Undergraduate federal student loan interest rates could fall below 3% for the first time in more than 15 years this July, based on the most recent 10-year Treasury note auction.

At the same time, parents with 529 college savings plans may have seen their account balances tumble during the coronavirus pandemic.

Should those savers now consider taking out loans for college instead?

“If you can get a loan at 3%,” says Melissa Ellis, a certified financial planner and founder of Sapphire Wealth Planning in Overland Park, Kansas, “why wouldn’t you?”

While that low rate looks good, here’s how to tell if this strategy is actually right for you.


Like other investments, 529 savings plans fluctuate due to market swings. Most 529s try to lessen that impact by switching from aggressive investments to more conservative ones as you get closer to paying for college.

If you stayed aggressive, your account may be underwater right now. Avoid panicking.

“Don’t knee-jerk entirely out of the market and lock in permanent losses,” says Vivian Tsai, chair of the College Savings Foundation, a nonprofit in Washington, D.C.

Instead, consider taking federal student loans so you can stay invested long enough for your 529 to recover. Ideally, you’ll earn enough to negate any interest accruing on the loans as well.


You’ll be in even better shape if you qualify for subsidized federal loans, which don’t charge interest while your child attends school at least half-time.

Subsidized loans are available to students who demonstrate financial need. That may not be the case for those with a 529.

According to Sallie Mae’s 2019 “How America Pays for College” report, the majority of families who contribute to 529s have incomes of more than $100,000.

The financial aid award letter from your child’s school will state if you qualify for subsidized loans. If you’re waiting on an award, estimate your eligibility with the Department of Education’s FAFSA4Caster tool.


If you don’t qualify for a subsidized loan — and your 529 account remains in good shape — you may feel confident your earnings will exceed a potential 3% interest rate.

“This is probably a really good time to be able to expect better returns,” Ellis says. “Because anytime you have a very sharp downturn, at some point it’s going to come back.”

If you borrow, pay off the loan’s interest before it capitalizes, or is added to your balance. Otherwise, the amount you repay will increase, cutting your potential profit.

Ian Aguilar, a CFP at Mellen Money Management in Ponte Vedra, Florida, agrees that “if you’re playing the pure mathematical game, you’re probably going to make out better with the markets.”

But he adds that the relatively short repayment term and small size of student loans limit the upside of this strategy.

“It’s not something I think you want to play with,” Aguilar says.


Regardless of your 529’s recent performance, you may want to wait to withdraw money if a grandparent or noncustodial parent owns the account.

When calculating federal financial aid, withdrawals from such accounts count toward the student’s income, which has “the harshest assessment rate,” says Shannon Vasconcelos, a college finance consultant at Bright Horizons College Coach, an educational adviser in Watertown, Massachusetts.

Students in this situation may want to opt for loans for their first year and a half in school.

“Once we hit that magic Jan. 1 of sophomore year,” Vasconcelos says, “the noncustodial parent can then pay off the student loans with the 529.”

That transaction would not affect future aid eligibility, she says.


529 savings plans are investment accounts in which earnings can grow and be used tax-free, provided the funds go toward eligible education expenses.

The 2019 Setting Every Community Up for Retirement Enhancement Act, or SECURE Act, made repaying up to $10,000 in student loans an eligible expense.

But not all states have aligned with this federal guidance, Vasconcelos says.

If yours doesn’t, you could be charged state taxes on withdrawals, and states may look to recapture your previous deductions for 529 contributions.

Reviewing your state’s history with past federal 529 changes can help you make an educated guess about potential penalties. For example, California and New York did not align with the 2018 change allowing 529 funds to be used for K-12 education expenses.


This article was provided to The Associated Press by the personal finance website NerdWallet. Ryan Lane is a writer at NerdWallet. Email: Twitter: @ryanhlane.

Survey: Parents with student debt are saving for college while their kids are still young

Pittsburgh Post-Gazette

September 19, 2019

A new national survey of parents eyeing college for their children is out, and two of the findings suggest that adults both recognize the importance of saving and are doing so while their kids are still young.

One reason why that’s true might be found in another of the findings: 37% of those parents are still saddled with student debt of their own.

Results from the annual College Savings Foundation survey appear to illustrate both the impact that America’s $1.5 trillion student debtload is having on families, and how they are embracing strategies that could help reduce their future need to borrow.
The 2019 State of College Savings included roughly 1,000 parents of varied incomes. It was conducted by Survey Monkey on behalf of the Washington D.C.-based foundation, a not-for-profit organization helping families achieve their educational savings goals.

The issue of student debt has become a major talking point nationally, and has figured prominently in the 2020 presidential race. Pennsylvania students who take out loans feel the bite in particular, graduating with the second highest average debt nationally at $37,061, eclipsed only by Connecticut, where the average debt is $38,669.

Those figures are from state-by-state data released this week by the Institute for College Access & Success. It finds the average debt nationally among the class of 2018 is $29,200.

Among the College Savings Foundation survey results: A vast majority, 90%, expect to pay for their child’s higher education, and in fact, 77% said they were saving before their child was six years old. Even so, they want their children to bear some of the burden.
Of those surveyed, 73% expect their children to contribute and 47% expect them to get a job to help finance their education costs.
The survey found that 31% are saving more than last year.

Three quarters of the respondents, 76%, already are saving for their children’s college costs. The survey found that 70% of savers garnered more than $5,000 per child, and 47% more than $10,000 per child.

“Parents clearly understand the long-term impact of saving in funding their children’s education,” said foundation chair Richard Polimeni. “This is vitally important in reducing families’ reliance on student debt.”  

He said the subject of college savings can be daunting and lead to procrastination. But it’s better to plan sooner rather than later. “Whatever the dollar amount is that you can afford is what you do,” he said.

The survey found that 529 college savings plans remain the most popular vehicle for college savings.

Some 41% of savers said it was their primary savings option. These plans let funds build up free of federal and, in general, state tax for qualified education expenses, according to the foundation.
Just over two-thirds of the parents recognized that having dedicated savings made it more likely that their children would aim for college, according to the survey.

It also found that many parents appear to have broadened their idea of what college is to include venues beyond tradition four-year campuses. It found 59% of parents consider vocational and career schools as similar to public and private college.

This is the 13th year that the foundation has conducted a national benchmark survey of parental attitudes and actions in the area of college savings. The survey is being released during College Savings Month.

More than seven in 10 parents questioned appear to recognize that saving was a far less expensive path to a degree. That may be good, since it also was clear that the debt they already hold — generally, and specifically in student loans — are impediments.

Parents were asked what would make it easier to save up money. The top answer: “Less debt.”

Bill Schackner: bschackner@post-gazette, 412-263-1977 and on Twitter: @Bschackner

Pittsburgh Post-Gazette: Cost of college has the attention of more high school students than ever

Pittsburgh Post-Gazette

It doesn’t take a college degree to know money doesn’t grow on trees, which is why it’s no surprise that a new survey of U.S. high school students found them more cautious about the cost of higher education and how it relates to their careers than ever before.

In its 10th annual survey on the topic, the Washington, D.C.-based nonprofit College Savings Foundation found the highest percentage ever of high school sophomores, juniors and seniors who said costs will be a deciding factor in which college they attend or whether they end up going at all.

This year’s survey of 500 students also found the highest percentage in the survey’s history — 55% — who said they think about technical schools and
career schools in the same way they look at traditional colleges.

“High school students today consider technical schools and career schools on par with a four-year degree,” said Richard Polimeni, chairman of the College Savings Foundation and director of education savings programs at Bank of America in Pennington, N.J. 

“They see technical and career schools as a viable alternative at a substantially less cost and they often come out with a high-paying job,” he said.

Career choices are influential — with 71% with students this year saying their career plans will affect their school choice, up from 63% last year.

But the most significant trend uncovered by the survey was related to the cost of attending college. 

The cost will be the deciding factor for where 83% of high school students choose to attend college, up from 75% who felt that way last year. Also, 75% of those surveyed this year said the cost of college will be the ultimate deciding factor in whether they decide to attend college at all, up from 65% last year.

Student loan debt in 2019 is at an all-time high of $1.6 trillion, according to the Federal Reserve Bank.

Higher than credit card debt and automobile debt, student loan debt is now the second highest consumer debt category behind mortgages. Borrowers in the class of 2017, on average, owe $28,650, according to the Oakland, Calif.-based Institute for College Access and Success.

Half of the students surveyed by the College Savings Foundation had jobs during high school; 89% plan to work during college to help with costs; 19% are choosing a gap year between high school and college; and 66% will use the gap year to work.

“The message is getting out and students are starting to pay attention,” said Mr. Polimeni. “They are concerned about having to pay student debt for 10 or 15 years or more down the road after college.”

Gen Zs Focus on Career Paths and Cost Savings in Pursuit of Higher Ed says New Survey by College Savings Foundation

High school students realize saving is key to funding higher education

Today’s high school students are career-focused and cost-conscious about their decisions to choose and fund higher education, according to the findings of The College Savings Foundation’s (CSF) 10th Annual How Youth Plan to Fund College Survey. The survey gathered responses from sophomores, juniors and seniors across the country that depict a generation taking a practical and responsible approach to the future.

The survey found that the costs of college loom large for students. 83% of respondents said costs are a factor in deciding which college to attend – up from 75% last year; and for 71%, costs are a factor on whether to attend college at all, an increase from 65% last year. Career choices are also very influential, with 71% of students saying their career plans would affect their school choice – up from 63% last year.

“Gen Z students are thinking ahead to both the careers they want to pursue and what kind of education they will need to get there. We are pleased to see that this pragmatic approach also extends to their saving,” said Richard J. Polimeni, Chair of CSF, a leading nonprofit helping American families save for higher education.

The Role of Saving for Students and Families

Overall, students understand the need to save for their higher education costs with 44% responding that they are saving. Of the 44% saving:

  • 17% said that 529 college savings plans are their primary way of saving
  • 61% have saved more than $1,000 to date; and 21% have saved more than $5,000.

54% of all students said their parents are saving for them to attend college, and of those, 27% said the primary way their parents are saving is through 529 plans. 60% of all parents who are saving have amassed more than $5,000, and 36% have saved more than $15,000.

48% of students expect to receive money for education from relatives, and of that, 21% of students said that relatives are saving in a 529 college savings plan for them.

“This is consistent with trends we have been seeing where grandparents and other family members have been helping to save and assist with a grandchild’s or other loved one’s education,” says Polimeni.

69% of all students said they would rather receive money for education on special occasions than tangible gifts.

Funding A Practical Path to Higher Education

When it comes to funding their higher education, 69% of students said they will pay or possibly pay for part or all of their college costs.

Most students, 84%, are also talking to their parents about their parents’ involvement in funding higher education – conversations reflecting a focus on career and cost considerations. Nearly half of all students, 47%, said their primary conversation with parents is about the career path they want to follow. The next most popular choice (26%) is the type of school they want to go to – public, private or community.

With student debt reaching $1.5 trillion, students’ concerns about costs are reflected in their choice of higher education: 40% of students said they would attend public college and 26% said community college. Interestingly, at a total of 12%, technical and career education (10%) and apprenticeship programs (2%), were nearly as popular as private college (13%).

Continuing an upward trend, 55% think of a technical and career education or apprenticeship programs in the same way that they think about college – the highest level in the survey’s history since this question has been asked.

The role of technical skills is likewise prominent in longer-term education plans. 30% of all students expect to go to graduate school, and the next most popular response was 23% saying they would pursue certification around career skills.

Ways to Tackle Costs and Reduce Debt

In a new question this year, when asked what their primary action would be to reduce reliance on student loans, the greatest percentage of students, 23%, said they would save more money; 19% said they would attend a community college; 15% said they would attend an in-state school, and 15% said they would live at home.

To help with costs, almost all students (89%) said they would work full- or part-time during college. Half already have jobs during high school. Work is also a priority for the 19% of students who are choosing a gap year; 66% of them will be using the year to work.

In another way to cut costs, 58% of students overall say they would live at home while attending college.

54% of all students expect to receive financial aid, and most students are aware that financial aid packages often include student loans. Students who plan to borrow money outside their aid package dropped to 46% from 65% last year.

68% of all students are concerned about paying back their student loans, and 60% of all students expect to be paying them back for up to10 years.

The 2019 How Youth Plan to Fund College survey reached over 500 high school sophomores, juniors and seniors across the country via Survey Monkey. The College Savings Foundation (CSF) is a Washington, D.C.- based not-for-profit organization helping American families achieve their education savings goals. Learn more and see an Infographic on the survey at