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Money Life with Chuck Jaffe

CSF Chair Vivian Tsai spoke with Chuck Jaffe, host of “Money Life with Chuck Jaffe” (moneylifeshow.com) about the findings of CSF’s Parents Survey:  how their children’s higher education plans and careers and study plans have been changed by COVID, how their perceptions of higher ed are broadening beyond traditional 4-year colleges, and how parents would like to see discounts on full tuitions for online 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.

CSF Chair, Vivian Tsai, interview with Ellenbecker Investment Group Wealth Advisors

Vivian Tsai, CSF Chair, is interviewed on WISN AM1130 by the Ellenbecker Investment Group in a wide ranging discussion of how COVID-19 has changed high school students’ higher education and career choices, how higher education may change with online learning, and the enduring importance of saving in 529s.

Here is the link to the actual interview:

https://moneysense.s3.amazonaws.com/2020+Money+Sense+Shows/8-16-20+-+Radio+Version+-+Vivian+Tsai.mp3

Vivian Tsai tells the Pittsburgh Post-Gazette how COVID has affected the higher ed plans and finances for High School students across the country.

Pittsburgh Post-Gazette

High school graduates are changing their college plans because of COVID-19

Andrew Rush/Post-Gazette
 

 
TIM GRANT
Pittsburgh Post-Gazette
tgrant@post-gazette.com
 
JUN 30, 2020
 
6:01 AM
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: tgrant@post-gazette.com or 412-263-1591. 

CNBC.com 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.

CNBC.com

PERSONAL FINANCE

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

PUBLISHED THU, JUN 4 202010:42 AM EDT
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 NitroCollege.com 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.