If you are a parent of a high school senior, get financially organized in the new year for the next stage of your child’s education.
The good news: more than two-thirds (68%) of parents with at least one child enrolled in college have saved or are currently saving to help pay for their child’s education, according to a national survey of 1,072 parents of current college students by College Ave Student Loans conducted by Barnes & Noble College Insights
For those setting aside money, nearly 3 out of 4 (71%) of these parents had up to $40,000 accumulated by their child’s freshman year. And for the rare 1 out of 10 families (11%), there was more than $100,000, according to a news release.
Parents rely on a mix of savings options to save for their child’s college, according to the survey. More than half use a savings or checking account (53%) or a 529 account (53%). Investment accounts are used by 1 out of 5 (20%); savings bonds about 1 out of 10 (9%). Some parents are using their retirement as college savings accounts: 401Ks (9%) and traditional IRAs (5%), the news release added.
But there’s always room for improvement: Despite regularly setting aside money for their child’s education monthly or bi-monthly (42%) or weekly or bi-weekly (18%), less than half of parents (44%) feel good with the amount they have saved. Regardless if they have saved money or not, the cost of college feels overwhelming to the majority of all parents (68%), according to the College Ave survey. In 2018-2019, tuition and fees and room and board at a public in-state school was more than $21,000 and more than $48,000 at a private university, according to The College Board.
“The survey highlights that the majority of parents are saving and saving regularly. By making these money moves, parents should feel good that they are taking the right steps for their child’s education,” said Joe DePaulo, co-founder, and CEO of College Ave Student Loans in the news release. “As your child enters their last year of high school, it’s a good idea to reassess your college savings and get a plan started now of how you will pay for four years of college.”
While savings is an excellent place to start, you can make more financial moves in the new year to make sure you have a smart money strategy plan in place. To help, DePaulo offers the following financial checklist for parents of high school seniors via the news release:
- Fill out the FAFSA as soon as possible. The majority of those surveyed (87%) plan to fill out the Free Application for Federal Student Aid (FAFSA), which became available on October 1. Do it as soon as possible, as some aid is offered on a first-come, first-serve basis. Filling out early helps ensure you don’t miss out.
- Don’t rule out your chance for aid. For those who choose not to fill out the FAFSA, 73% feel their income is too high to receive financial aid. But many factors, not just household income, determine how much aid students receive. The U.S. Department of Education awards over $120 billion per year to help students paying for higher education. Scholarships, grants, work-study programs, and loans are all available to prospective students, and you might get tuition discounts from individual schools. Even if you feel your family’s income is high; apply.
- Make a “financially-balanced” college list. A school’s academic quality and their child’s future career are the top factors that impact the schools that made a child’s college list, according to the survey. While the majority of families (70%) do not let a school’s sticker price discourage their child from applying, another 4 out of 10 families (40%) say it’s been difficult to find colleges they could afford. To help, make sure the college list is “financially balanced.” By applying to a variety of schools, you are more likely to find a school that fits financially and receive a variety of financial aid packages to consider.
- Keep searching for scholarships. The majority of parents (70%) plan to use scholarships and grants to help pay for college. However, more than half (54%) say it’s been difficult for their child to find scholarships. Stick with the search as every little bit counts. Use an online scholarship matching tool, have your child meet with his or her high school counselor, and ask your family and friends for help.
- Prepare your credit. If your child will need to take out private student loans, be prepared to co-sign. Just as if you were buying a home, prepare your credit as a cosigner’s credit history and credit score are key factors that help determine whether a loan is approved and at what interest rate. Get a copy of your credit report and make sure there are no errors. And, as with buying a home, be cautious about taking on other large debts or closing existing accounts.
About the Survey
*The College Ave Student Loans survey was conducted by Barnes & Noble College Insights. The national online survey of parents with at least one child currently in college had 1,072 respondents and was fielded in September 2019. In the past year, Barnes & Noble College Insights has conducted more than 50 research studies and 100+ survey polls of students, faculty, and parents that interact with one of its 772 campus bookstores across the nation.
Source: College Ave Student Loans