When campuses across the country shut down due to the coronavirus pandemic, college students were left to fend for themselves financially, and many have lost their jobs. Students are no longer allowed on campus, yet are still required to pay for tuition and course materials. As a result, college students are in a complicated financial situation.
Stimulus checks outlined in the CARES Act aimed to provide financial relief to millions of Americans, yet apparently left out a big portion of the population: college students. College students are in a tricky spot: too old to enable their parents to earn an extra stimulus credit, but too young to be eligible for their own check.
Which brings us to this question: should there be stimulus checks for college students? Here’s a look the current stimulus package, and whether college students should get a stimulus check of their own.
Current stimulus checks don’t include students
The CARES Act included a cash payout to eligible Americans to provide financial assistance during the pandemic. Single income earners are eligible to receive up to $1,200 or $2,400 for joint income earners. However, the stimulus checks don’t account for college students.
Parents can collect an extra $500 per dependent child as long as that child is 16 years or younger. But if you have a child between the ages of 17 and 24, you won’t receive the money. Alternatively, college students aren’t eligible for their own stimulus check if they are claimed as a dependent. It’s a lose-lose situation.
College students lost their jobs, too
On top of not receiving a stimulus check, a majority of college students with jobs had their work canceled, moved remote, or delayed. A lack of income coupled with a 14.7% unemployment rate means that many college students and their families are struggling to stay on top of tuition costs.
Tuition and fees have skyrocketed to $10,440 per year on average at a public four-year institution, so students often need financial support, like paid jobs to help keep up with school expenses. Many students depend on federal work-study programs and on-campus jobs, which have been canceled. As job loss continues to increase, it’s clear that college students need financial assistance more than ever.
Current relief is confusing for students, and institutions
With stimulus checks and jobs out of reach, college students look to their universities for support, but they’re coming up short. The CARES Act provided $6 billion in emergency grants through the Emergency Financial Aid Grants to Students. This money may be used to help students pay for course materials, food, housing, health care, and childcare. The Department of Education has instructed universities and colleges to determine which students will receive those grants, but universities seem confused about how to distribute the money.
For instance, institutions aren’t allowed to reimburse themselves if they proactively refunded students for room and board, tuition, course equipment, and other fees. Institutions are depleting funds to help students, but can’t use the grant money to replenish those funds. As a result, they’re holding on to the grant money while they try to better understand the guidelines. While institutions scramble to calculate how much money to award to students, which students are eligible, and how to distribute those funds, students could have benefited from a direct stimulus payment to help them in the short-term.
College students: dependent or independent?
When it comes to finances, college students can range from self-sufficient to dependent. Independent college students are completely responsible for their financial well-being, while dependent students rely on support from their family. The Pew Research Center defines dependent students as those who are younger than 24 and assumed to be receiving financial support from their family. Independent students are those who are 24 or older as well as younger students who receive little to no financial support from their parents or other family members.
Consider that 20% of dependent students and 42% of independent students were in poverty in 2016. This sub-group not only struggles to afford school, many of them don’t have enough money to cover their basic needs. While a stimulus check won’t cover a full semester of tuition, it could lessen the economic blow to these students and help them stay in school.
Whether they pay for everything themselves or lean on their parents for support, students of many different financial backgrounds borrow money to stay in school. If students are increasingly taking out student loans, any financial relief, including a stimulus check, could help them stay enrolled.
Two fixes from lawmakers
There are two solutions that lawmakers could provide to get college students out of limbo if there’s another round of stimulus checks. The first solution is to let adults ages 17-24 receive a $1,200 stimulus check regardless if they receive financial support from others or if they attend college.
The second solution would be to include this group as qualifying dependents. That means parents would be able to receive a credit for children ages 17-24 regardless if they attend college. That’s what lawmakers are leaning towards as outlined in the proposed Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act.
The HEROES Act proposes another wave of stimulus checks only this time, dependents who are in college will be included as a qualifying dependent. The stimulus check amounts are the same as last time: up to $1,200 for individuals and $2,400 for married couples. Parents would receive an additional $1,200 for each qualifying dependent (with a maximum of three dependents), including their college-aged children. The money doesn’t go directly to college students, but to their parents. If the bill passes (unlikely in its current form), qualifying families could receive up to $6,000 in stimulus payments.
Financial assistance is at your fingertips
Stimulus checks are temporary. But eventually the economy will get back on a better path. Until then, you don’t have to navigate your finances alone during a crisis. The Freedom Debt Relief team is committed to providing guidance that helps you move towards a better financial future. Check out the Freedom Debt Relief blog each week to gain insight on how to manage your debt, including our debt settlement program.
- How to Prepare for a Recession if You Are Already Struggling (Freedom Debt Relief)
- How to Find the Coronavirus Assistance You Can Get from Your State (Freedom Debt Relief)
- Learn a New Language During Quarantine: The Language of Money (Freedom Debt Relief)
- College Students Were Promised Aid in Coronavirus Stimulus. It Hasn’t Arrived. (USA Today)