Fidelity: COVID-19 shapes college plans, but cost expectations are still too low
High school students are more aware of how much college will cost
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The coronavirus pandemic is affecting higher education decisions, though families still tend to underestimate how much college will cost, a new study shows.
Fidelity Investments published a survey on Tuesday that showed about 60% of households said the pandemic has shaped their views on higher education.
Four in 10 respondents said cost was the "most important" factor when evaluating options.
About 80% of high schoolers said they were open to community college as a means to achieve their goals, while 90% said the same of public, in-state colleges.
Current high school grads are also more conscious than their predecessors (recent college graduates) of how much their college education will cost their parents.
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The study also found, however, that parents’ expectations of college costs were lower than the reality. On average, high school parents expected to pay roughly $22,257 (including tuition, room and board, books and fees) per year. One-in-four parents thought the yearly cost would be $5,000 or less.
The average public in-state four-year college costs around $26,800 per year, according to College Board, while the annual cost for a private, four-year education was up around $54,800.
Consequently, families’ expectations for how much debt they will have when they graduate was also low. Forty percent of high school students expected to graduate with $5,000 or less in debt, while more than one quarter of parents projected similar estimates.
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In the second quarter, Americans owed more than $1.7 trillion in student loan debt, according to data from the Federal Reserve.
According to data from Student Loan Hero, about 69% of college students from the class of 2019 took out loans. They graduated with an average debt of $29,900.
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On Friday, the U.S. Department of Education announced it was extending relief for student debt through Jan. 31, which was expected to be the final extension of the freeze on federal loan payments, 0% interest and the pause on collections of defaulted loans.
"As our nation’s economy continues to recover from a deep hole, this final extension will give students and borrowers the time they need to plan for restart and ensure a smooth pathway back to repayment," U.S. Secretary of Education Miguel Cardona said in a statement. "It is the Department’s priority to support students and borrowers during this transition and ensure they have the resources they need to access affordable, high quality higher education."
Progressive Democrats spoke out about the measure on Friday, urging the president to cancel student debt altogether.