By Janet Alvarez – CNBC
When the rapid social and economic changes brought about by the COVID-19 pandemic are combined with a new incoming Administration and a shift in the balance of power between parties in Washington, several aspects of our financial lives are likely to be affected, including those educational costs. From a possible student loan forgiveness To more educational options and tuition freezes, here are the ways that educational costs can change in 2021, for better or for worse:
Tuition costs for four-year public universities increased a mere 1.1% for the 2020-2021 school year, the first time in decades that the increase has not exceeded the rate of inflation. The 2.1% increase in private four-year college tuition was also among the lowest since 1990.
“This year’s data underscores the profound impact Covid-19 has had on higher education,” Jessica Howell, vice president for research at The College Board, said in a statement.
In fact, license plate freezes are becoming increasingly common at many colleges, while others offer online instruction at discounted prices, and that pattern is likely to continue through 2021.
“Several universities have announced a tuition freeze or tuition reduction for the fall semester 2021, in order to encourage those who may be facing financial difficulties due to COVID to enroll and / or continue their path in the higher education. The motivation behind reducing tuition or offering a tuition freeze is to strengthen their student bodies to help mitigate the loss of higher income, ”said Lauren Maxwell, assistant vice president of Trustco Bank.
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The shift to online learning can have more lasting impacts. An increasing number of universities offer online or hybrid options at a lower price than traditional in-person instruction. This can create a fork in long-term cost structures and offer students a greater variety of educational options, including greater geographic and work-study schedule flexibility. Over time, this can reduce reliance on student loans to some extent.
The Biden administration has indicated its support for a federal plan to forgive student loans up to $ 10,000 and has stated that it intends to extend the January 31 deadline on the currently in effect forbearance. That means federal student loan borrowers can expect continued interest accrual and payment suspension, as well as possible loan forgiveness.
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However, these only apply to federal student loan borrowers, so private loan borrowers should check with their lenders about any loan modifications or flexibility.
“While Congress eventually left student loan forgiveness out of the most recent stimulus package, the incoming administration has indicated that they would like to re-examine the issue and effectively pay off $ 10,000 of student loan debt right away.
Meanwhile, student loan payments for federal loans have been stopped through January 31, 2021, with no further extensions. Those who have been financially affected by COVID should explore options they may have with their loan company, including income-based repayment plans or refinancing their student loan debt at a lower interest rate. ”Says Maxwell.
Other issues likely to be addressed this year include a streamlining of income-sensitive payment plans; a solution to the phenomenon of the “tax bomb” that taxes any loan forgiveness as income; and better access to the public service loan forgiveness program.