For the past four years Discover Student Loans has conducted a survey of 1000 adults with college-bound children. This year’s survey was conducted in April, and the results were just released. Here are a few surprising points that should help parents and students begin the college financial aid discussion:
• College is Important to Their Child’s Future: 95% felt that college was either very important or somewhat important. Only 3% felt it was not very important. Parents realize the value of a college education in assuring a bright future for their children.
• They’re Just Not Sure How Much it Costs: Less than half were very knowledgeable when it came to determining the entire cost of a college education beyond tuition. In fact, 12% said they were not very knowledgeable at all. Knowing the complete cost of a college education is crucial to determining the extent of financial aid and student loans that will be required to pay for it.
• They’re Not Going to Pay for All of It: While 75% said they would help their child pay for a college education, 16% said they would not, and 9% just weren’t sure. This is important information to share with your child, before any decisions about where to attend are made.
• They Are Worried About Money: With the anticipated rising costs in college tuition and associated out-of-pocket expenses, 45% of parents are already very worried they won’t have enough money to pay for college. 33% are somewhat worried and only 21% are not very worried or not at all worried. Most parents have good reason to worry about anticipated college costs, but careful planning and maximizing the amount of financial aid a student receives should help minimize the burden.
• Students Might Be In for a Surprise: When asked how much of their child’s education they could afford, a surprising 24% said none of it, while 31% said up to 25% of it. Only 9% could afford all of it. Children need to know this information so they can make smart decisions about which college to attend.
• Money is Coming From a Variety of Sources: Some parents already have 529 savings plans and family savings in place, but 29% felt they would be relying on student loans. Parents and students need to discuss the impact of these loans on the family budget, and get a plan in place for repayment before the school year begins.
• Students are Shouldering More of the Responsibility: While only 15% of the parents felt their child should pay for all of a college education, 30% believed the child should pay for most of it and 46% felt the child should at least pay for some of it. Only 7% felt the child should pay for none of it.
Most importantly, these results point out the need for frank and ongoing discussions between parents and college-bound or college-aged children. Waiting until the child graduates is far too late to allow for smart decision-making.