What to do when COVID-19 Affects Your Child's College Plans

Financial Wellness By Noah - Updated on February 10, 2021

Many parents and students believe hefty tuition fees should purchase a particular college experience — such as in-person classes, mentorship, and access to labs or other resources. When classes moved online in the spring due to COVID-19, some students sued to try to recoup the value they felt they lost.

The sticky truth is that many college savings plans and expenses are a financial casualty of the coronavirus pandemic. It’s often difficult to redistribute money you’d earmarked for education or get much money back once you’ve paid for your student. This can be more frustrating than ever when many families are adapting their finances to the pandemic

Why Won’t the University Refund My Tuition?

There are multiple reasons that a student may end up withdrawing from a semester of college, such as struggling with virtual learning, or having to leave campus after breaking social distancing rules.

Unfortunately, getting a refund on tuition is difficult. The challenge is that colleges can’t generally swap out students mid-semester, and a student can’t “return” information they learned in the first weeks or month of classes. If colleges feel that they can still offer equivalent coursework online, they’re also unlikely to agree to a refund. You may have an easier time getting money back for room and board or other fees, although some colleges did not offer prorated refunds if their campus closed in the fall 2020 semester. Some schools may refund partial tuition on a sliding scale, but unless you withdraw in the first week or two of the semester, you can expect to be on the hook for the majority of the costs.

Even contracting COVID-19 is unlikely to result in a refund. Only 6% of colleges and universities offer 100% tuition refunds for medical withdrawals. If students are dismissed for a disciplinary reason, such as breaking social distancing rules, it’s extremely difficult to make a case for a refund.

How to Mitigate Tuition Losses

The 2020-2021 academic year may be unlike any other for colleges and universities. While most colleges seem firmly against tuition refunds, a lot is up in the air right now as universities and students draw their own lines in the sand. In other words, you may have more chances to reclaim lost college costs, depending how hard you’re willing to fight.

Students at several colleges, including Rutgers and Texas A&M, have banded together to demand reduced tuition, reflecting the loss of access to campus services they say their payments would normally cover. A student petition at Brown University resulted in the university reducing or cancelling several fees. Connecting with as many other students as possible (or even asking alumni to add their voices) may be your best chance at convincing your university to consider lowering or waiving certain costs.

Another possible option to consider is tuition insurance. A third-party provider may insure your student if they need to withdraw from classes because they (or you) become ill, including COVID-19 illness. Tuition insurance may not cover disciplinary removal, such as the students dismissed from Northeastern University for breaking social distancing requirements. Even if you feel that social distancing rules are not feasible for students to follow, if they agree to the rules in their code of conduct, you may be out of luck as far as getting tuition back.

Finally, have a backup plan in place. When campuses closed in the spring 2020 semester, many students had little time to pack, make travel arrangements, and finalize a place to stay. Some students didn’t have a safe living option besides campus housing. If your student is on campus, do you have a way to get them home on short notice that is safe and affordable? Do you know how you’d deal with collecting their possessions? If you are fortunate to have extra living space, such as a guest home, you might even be in a position to help a student without another place to go.

Can I Still Use 529 Funds for Virtual College?

The pandemic may have changed many plans, or even prompted young adults to reconsider their best option. Fortunately, you have quite a few options for using 529 funds to cover your child’s next steps.

  1. Even if your child decides against pursuing a 4-year degree, the best 529 plans can go toward many vocational schools, technical schools, or apprenticeships, as well.
  2. You can use 529 funds toward necessary equipment for your student to participate in classes. Computers, software, and even Internet access may be qualified expenses. Check with a qualified financial professional about expenses you’re not sure of, such as a noise-canceling headset, or how to offset a student’s share of Internet access on a shared family plan.
  3. If you need to take a non-qualified withdrawal from your student’s 529 college savings plan, you’ll pay taxes on investment gains, along with a 10% penalty in most cases.

Unfortunately, you can’t dip into your 529 plan to cover living expenses. You can pay for a college’s room and board plan with 529 savings, but if your student is living at home, you can’t offset grocery or mortgage bills out of the 529 account. That’s one reason why it may be helpful to use 529 funds toward as many qualified expenses as possible, such as books, course fees, and computers, since you may have a higher household budget than you’d planned for.

When Will College Go Back to Normal?

There’s no saying for certain what coming months will bring, but some experts worry that COVID-19 will continue to be a major threat this winter. Illnesses can make their way through a campus any year, and it seems possible that some campuses will face hard choices again about whether to stay open or close for student and staff safety.

One possible silver lining is that the need for widespread virtual college classes may drive colleges and universities to innovate. Implementing more responsive technology to accommodate students and professors may be part of a “new normal” that expands the ways people can access a college education. 

In the meantime, preparing a safe, quiet study space — and fast Internet — may be a major part of supporting your college student to get the best possible education they can right now. Whatever the future brings, a solid pandemic financial plan is the best way to support your family.