The importance of financial literacy and the COVID-19 pandemic’s effect on how students pay for college
Around this time last year, many worried about the COVID-19 pandemic’s effect on those graduating high school. According to a 2021 JA Teens & Personal Finance survey which surveyed 2020 high school graduates and current high school students, only 25% of the 2020 high school grads surveyed actually delayed their plans to attend college due to the pandemic. Of the current high school juniors and seniors polled, only about 12% plan to delay attending college due to the pandemic. The same study shows that only 40% of current high school students planned to earn a college degree within the next decade. Why is the percentage so low?
How the coronavirus pandemic has impacted the ability to pay for college
With the national unemployment rate at 6% and millions of Americans still out of work, many students will still rely on their support system to help pay for part of the tuition. In the same 2021 JA Teens & Personal Finance survey, almost three-in-four 2020 graduates are relying on assistance and 37% of those surveyed already know their parents and guardians will be cutting back on their planned financial support due to the coronavirus pandemic.
The impact on Black and Hispanic teens is even greater with almost 60% of current juniors and seniors saying the COVID-19 pandemic has affected how they will pay for college compared to their white peers reporting 45% will be impacted by the pandemic.
56% of college students say they can no longer afford tuition, according to a survey conducted by OneClass in 2020, which polled more than 10,000 freshmen, sophomores, and juniors from over 250 colleges and universities across the country.
Of the same students who were polled, about 50% said they are still figuring out how to pay for college because of the pandemic’s impact on their financial standing and 7% of students have already unenrolled to find full-time employment or alternative education options.
Why financial literacy is important now more than ever
In a survey conducted by Lending Tree, 36% of parents have had to use their child’s college fund to help cover expenses due to the coronavirus pandemic. From parents working remotely while others are borrowing money to cover expenses due to a job loss, children understand their family’s have been impacted by the COVID-19 pandemic.
Junior Achievement also reported an average of 58% of high school teens and 2020 graduates reported having conversations about their family’s finances. 23% of the Class of 2020 high school graduates are living with parents or guardians to save money due to COVID. Only a third of the high school graduates polled, said “being financially independent from parents” is a top goal, compared to a higher percentage (42%) for teens not yet graduated from high school.
Although the Class of 2020 and future graduates in 2021 have faced many challenges in the last year, many are optimistic about their financial future—65% and 72% respectively (Class of 2020 and current high school juniors and seniors).
Access to financial aid and education is crucial for student success
On average, college graduates owe about $30,000, according to the Institute for College Access & Success. During the pandemic, the number has risen to over $37,000, according to an analysis conducted by NerdWallet that used data from the National Center for Education Statistics provided.
Students need access to financial literacy programs in K-12 and continue to receive education about financial aid in college. With the American Rescue Plan Act passing in March 2021, the Higher Education Emergency Relief Fund (HEERF) received almost $40 billion of which half must be used for emergency financial aid grants to students. The funds are in addition to the CARES and CRRSA Act funds that added an additional $14 billion and $23 billion respectively.
ConexED has partnered with hundreds of educational institutions across the country to help students access financial aid assistance. Through the ConexED platform, students are able to immediately connect with the financial aid department via chat, email, or in-person or virtual meetings.
With the ConexED comprehensive platform, students are able to sign financial aid documents securely and during a meeting while it’s top of mind. Students can then download, print, and send those documents for quicker financial aid processing.
As Financial Literacy Month comes to an end, we need to continue to raise awareness to promote financial literacy and education in both K-12 and higher education. Preparing our youth to understand and create a positive financial future allows them more opportunities in the long run. Understanding basic financial principles like saving money in addition to providing workplace readiness skills, empowers students to make sound financial decisions.