Girl with red-orange hair in winter coat wearing medical mask with hands to face

College Financing in the Midst of COVID-19

The coronavirus pandemic has drastically affected the US economy, but that doesn't mean paying for college is impossible now. Here's what you should know.

As the coronavirus continues to impact higher education in drastic ways, colleges are tasked with deciding whether to reopen campuses, delay the start of the fall 2020 semester, or offer an online-only curriculum. But schools aren’t the only ones questioning whether a return to the classroom is feasible. Students and families are facing the same dilemma—particularly, those who are struggling financially during the pandemic. A survey by the National College Attainment Network, a nonprofit organization, found that FAFSA submissions for the 2020–2021 school year dropped by nearly 250,000 among lowest-income students. Overall, only 52.1% of the Class of 2020 had submitted a FAFSA as of May 1. 

The decrease in FAFSA submissions may be indicative of students choosing to attend more affordable schools closer to home, delaying their education, or not completing their degree programs. If you want to still pursue your education but are unsure about how to fund it, here’s what you should know about your college financing options moving forward.

Federal loans 

In response to the national emergency brought on by COVID-19, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was created. The coronavirus relief bill provides temporary higher education relief for existing and future federal student loan borrowers.

About repayment relief

Current federal student loan borrowers have a few options of short-term repayment relief. Until September 30, 2020, Direct Loans, FFEL Loans, and PLUS Loans owned by the Department of Education are automatically deferred and interest charges are paused. Also for this duration, collections on defaulted loans have been suspended. If you’re pursuing federal loan forgiveness or loan rehabilitation, the automatic payment deferment will not adversely affect your progress. Deferred payments through the end of September will count toward your requirement.

Related: The Student Loan Advice You Need to Know

Exclusions for Direct Subsidized Loan usage limit

Before the CARES Act, a student’s eligibility to borrow a Direct Subsidized Loan was limited to 150% of the time it takes to complete your academic program. For example, if a school states that a program takes four years to complete, your eligibility to borrow a Direct Subsidized Loan is limited to six years. Currently, if you were unable to complete your semester due to the qualifying emergency, the time you weren’t enrolled won’t count toward your 150% limit.

All-time-low interest rates

Students who are interested in taking out new federal loans for the upcoming academic year can expect record-low interest rates. Due to the current economic climate, loans that are dispersed between July 1, 2020 and June 30, 2021 will incur interest at the rates below. 

  • Undergraduate Direct Loans (Subsidized and Unsubsidized): 2.75%
  • Graduate Direct Loans: 4.3%
  • Parent PLUS and Grad PLUS Loans: 5.3%

With interest rates this low, if you rely on federal loans to fund your education, you may see significant savings on the total cost of your loan. These new rates are particularly advantageous if you opt for in-school deferment or have to put your loans in deferment or forbearance. Also, if your or your parents’ income has significantly changed due to the coronavirus, reach out to your school’s financial aid office. They may be able to adjust your financial aid package based on your heightened need.

Private loans

Private student loans are a financing alternative if you’re no longer eligible for federal student aid. But be aware that since the Department of Education doesn’t have legal authority over private lenders, the relief measures under the CARES Act don’t apply to private loans. Although the coronavirus relief package doesn’t cover private student loans, lenders recognize that this is a difficult situation for everyone. Many have publicly encouraged borrowers to reach out to them directly to discuss emergency disaster forbearance or deferment. Remember, each lender will have different relief options and eligibility requirements, but if you can’t make your private loan payments, reach out to your lender sooner rather than later to ask about your next steps.

Related: Types of Student Loans Explained: Federal vs. Private

Taking out new private student loans

The Federal Reserve is keeping interest rates at near zero as the US economy recovers from the pandemic. Interest rates on student loans may not be at 0%, but private student loan rates are much lower than they were before COVID-19. For example, some lenders are offering variable APRs starting at 1.25% and fixed APRs starting at 3.82%.

Since private student loans require credit checks, you’ll need to have strong credit to qualify for the lowest interest rates. With many students and parents facing financial hardship, dropped credit scores and loss of income may affect a student’s or parent’s ability to get approved for private student loans. If you’re stable financially and have good credit, a private student loan may help you finance the remaining gaps toward your college education. 

Scholarship and grants

When it comes to paying for college costs, scholarships and grants are the best routes to take because you don’t have to repay them. In winning more of these awards, you’ll rely less on loans and graduate with less student debt. There are many websites with search resources to help you find reputable scholarships and grants. Also, as a part of the CARES Act, higher education institutions are required to reserve 50% of their relief funds as emergency grants for students who have been affected by coronavirus-related disruptions. 

Related: What’s the Difference Between Scholarships, Grants, and Loans?

If you’re worried about being able to pay for the next academic school year, it’s critical that you reach out to your college’s financial aid office to learn how they can help and start exploring what your options are now. Reclaiming your education during a pandemic can feel challenging, but know there are many resources available to help you continue toward your degree.   

Start searching for scholarships to cover your educational costs using our Scholarship Search tool, and find even more advice in our Financial Aid section.

Like what you’re reading?

Join the CollegeXpress community! Create a free account and we’ll notify you about new articles, scholarship deadlines, and more.

Join Now

About Callie McGill

Callie McGill is a Content Marketer for


Join our community of
over 5 million students!

CollegeXpress has everything you need to simplify your college search, get connected to schools, and find your perfect fit.

Join CollegeXpress
Jeff Parsons

Jeff Parsons


Thank you so much for this valuable information about these opportunities. I truly appreciate the CollegeXpress communications and use them to keep my high school seniors informed about their opportunities!

Kory Gilbertson

Kory Gilbertson

High School Class of 2022

CollegeXpress has helped me explore my views on college in that "why do I wanna go to a certain school" way. It’s helped me explore the best fits in all of these outstanding choices. All these college admission counselors can access my accolades showing them how I could help their college. This source of information helps me show these admission directors who I am and what I'm interested in. Thanks to this platform, my experience for education will be better than most, and I'm so grateful for all that it has provided for me.

Josiah Kegg

Josiah Kegg

High School Class of 2021

I want to sincerely thank you all for this amazing website that's legitimately helped me find so many different scholarship opportunities. I've been stressing out for the longest time about paying for college since I would rather stay out of debt and have been working days trying to find any scholarship opportunity. When I found CollegeXpress, I discovered many easy scholarships that have given me hope for the future. Thank you and God bless!

Caio Matos

Caio Matos

High School Class of 2022

Starting the college admissions process as an international student was daunting. Thankfully, CollegeXpress was the first website I used for that cause and it helped me so much, from knowing where to start to deciding what my next move would be. I'll take a gap year, but I’m certainly using the website again when applying for fall 2023.

Nazira Abdelkhalek

Nazira Abdelkhalek

$2,000 Community Service Scholarship Winner, 2014

I am very honored to be this year’s recipient of the Multicultural Student Community Service Scholarship! This scholarship is vital to helping me achieve and fulfill my dreams, and gives me confidence and motivation as I begin my college career. The CollegeXpress website has been invaluable over the past year as I planned my educational and professional goals. I highly recommend it to all students as they begin to focus on their college and career interests. The website is a wonderful guide to schools and scholarships.

College Matches