Monday, 11 May 2020

The financial impact of the COVID-19 pandemic has been swift and widespread, sparing no one, including college students.

In March 2020, most college students found themselves quickly sent home from their campuses and transitioned to online classes for the remainder of the school year. Not only did this disrupt their lives and academic plans, but for many students, leaving campus meant losing jobs and work-study income and creating other unexpected financial problems.

Today, many students are still facing academic and financial uncertainty. However, recently passed federal legislation includes some relief to struggling college students and other resources are also available to help them through this time.

Emergency grants

The Coronavirus Aid, Relief and Economic Security Act, or CARES Act, contained around $6 billion in federal funding for colleges and universities to provide emergency grants to students in need. According to the legislation, federal emergency student grants are for "expenses related to the disruption of campus operations due to coronavirus (including eligible expenses under a student's cost of attendance, such as food, housing, course materials, technology, health care, and child care)."

How the funds are distributed varies from school to school. Some require an amended Free Application for Federal Student Aid (FAFSA) form, while others schools are using their own applications to determine eligibility. Students should check with their school's financial aid office for more information about applying for emergency grants.

Federal Work-Study Program funds

Students who participate in the federal Work-Study Program could still receive their wages even though they are no longer able to work due to campus closure or illness. Federal law gives schools the ability to continue to disperse the funds to students at the school's discretion. Students should check with their financial aid office to find out if their school is still paying Work-Study participants.

Economic impact payments

The CARES Act also included direct payments to millions of Americans affected by the crisis. Students who are not claimed as dependents on their parents' tax return could be eligible to receive a one-time, $1,200 payment. To qualify, the student can't make more than $75,000 a year and must have filed 2018 or 2019 tax returns. More information about the payments is available at the Internal Revenue Service (IRS) website.

Emergency financial aid

Students who have already filed a FAFSA form and have suffered a financial setback can appeal for additional emergency financial aid. To file an appeal, students need to update their existing FAFSA form to reflect the changes in their family's income. The deadline to change forms is June 30, 2020.

Students can also contact their school's financial aid office for assistance with their appeal. Additional aid is awarded only for special circumstances—such as a parent losing a job—and students should be prepared to provide documentation to support their appeal.

Unemployment benefits

College students who lost jobs could qualify for unemployment benefits. This includes students who worked so called “gig" jobs, such as driving for a rideshare company, as the CARES Act extended unemployment benefits to these workers on a temporary basis. Unemployment programs are run by states, so students should contact their state unemployment office to see if they qualify and to apply for benefits.

Additional financial assistance

Some colleges and universities have set up their own funds and are offering financial support for students beyond what's included in the CARES Act. Many non-profit organizations are also providing emergency scholarships to students during this time. Again, students should check with their financial aid office to see what other forms of aid are available.

Get the help you need

College is when young people first start establishing themselves financially. During this challenging time, it could be wise for struggling students to take  advantage of these resources in order to get through this crisis without causing any harm to their credit score or long-term financial prospects.

The content provided is for informational purposes only. Neither BBVA USA, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial consultant about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA USA or any of its affiliates.

Links to third party sites are provided for your convenience and do not constitute an endorsement. BBVA USA does not provide, is not responsible for, and does not guarantee the products, services or overall content available at third party sites. These sites may not have the same privacy, security or accessibility standards.