Paying for college likely ranks on the financial resolution list for many families of college-bound students. The good news is 71% of parents feel confident in their plan to pay and 79% have already started saving, according to a recent survey of 1,000 parents conducted by Barnes & Noble College Insights.
As families with teens and college-aged children examine their financial priorities for 2022, the survey sheds light on the difficult budgeting choices many families are facing.
Retirement and College Tuition Bills
Simultaneously funding these two major life events can feel overwhelming, the survey finds. 45% of parents are stressed about the need to save for their retirement and contribute to their child’s college education. More than half (56%) are willing to defer their retirement to pay for their child’s tuition bills and about 4 in 10 (42%) prioritize paying for college over saving for retirement. 1 in 5 (20%) have already dipped into their retirement savings to pay for their child’s college expenses.
Multiple Loan Balances
According to the survey, of those families who help their child pay for college, 45% have borrowed federal student loans, 15% have borrowed private student loans, and 15% use parent loans to fund their child’s tuition. However, education loans are just part of the mix. In addition, many families are also balancing a mortgage (70%), credit card debt (41%), and personal loans (22%).
Multiple Children in College
More than half of the parents surveyed have had or will have more than one child attend college at the same time. Close to half (49%) will pay for two children while nearly 1 in 3 (28%) will pay for three or more kids. And parents’ contributions don’t end with the tuition bills and room and board. Many parents keep the child on their phone plan (91%) and give a monthly monetary stipend (41%), according to the survey.
The survey also finds two-thirds (67%) wish there were more resources on how to plan and pay for college. As parents with college-bound students get their finances organized for 2022.
Here are some tips:
- Fill out the FAFSA. If you haven’t already, fill out the Federal Application for Federal Student Aid. The U.S. Department of Education awards over $120 billion per year to help students pay for higher education. Scholarships, grants, work-study programs, and loans are all available to prospective students to help them pay for their education, and you might get tuition discounts from individual schools.
- Budget now. College often costs more than parents expect. According to the survey, 70% of parents spent more money on college tuition and fees, 66% spent more and room and board, and 47% spent more on school activities than they expected. Start thinking about the college budget now to hopefully lessen surprise costs down the line.
- Apply to a variety of schools. 42% of parents would tell parents of incoming college freshmen to encourage their child to choose a more affordable school option. Importantly, shop around. With merit aid, private schools can have the same net price as state universities, which are typically more affordable. Make sure to check out the school resources and calculators available to get a sense of the amount of aid given and the total cost of college.
- Assess your income and savings. Two-thirds of parents (66%) report using income and savings to help pay for college. To help cover some of the costs, 33% of parents expect their child to work and contribute. And 12% of parents plan to pick up a second job or side hustle to help cover college expenses.
- Clean up your credit. 18% are focused on improving their credit score in 2022. If borrowing student or parent loans is on the horizon, make sure to get a copy of your credit report and check for any errors. Now is the time to take action to improve your credit score including paying bills on time and limiting new loans.
- Don’t sacrifice your retirement. 37% of parents surveyed said they would tell parents of incoming college freshmen to not sacrifice their retirement to pay for college. There are no unsecured loans to help cover your later years.
The survey was conducted by Barnes & Noble College Insights. The national online survey of parents of undergraduate students who attend a 4-year college or university at one of the campuses served by Barnes & Noble College had 1,000 respondents and was fielded in September 2021. Last year, Barnes & Noble College Insights conducted more than 50 research studies and 100+ survey polls of students, faculty, and parents that interact with one of its more than 770+ campus bookstores across the nation.
Source: College Ave Student Loans