A new survey by College Ave reveals a significant gap between parents' aspirations for their children's college education and their financial readiness.
The survey, which included responses from 1,000 parents of current college students, found that while a substantial majority of parents (89 percent) view a college degree as essential for their child’s future, less than half (44 percent) felt financially ready to handle the first tuition bill upon their child's high school graduation.
"Year over year, our College Ave survey shows that parents strongly believe a college degree is integral to their child’s future," Angela Colatriano, chief marketing officer at College Ave, said in a statement. "The survey highlights how families complete the investment puzzle, from savings and income to scholarships and borrowing.”
Convinced of the value of a college diploma, nearly all parents (93 percent) have a plan to contribute to their child’s college expenses through a variety of sources. These methods include parent income and savings (65 percent), grants and scholarships (62 percent), 529 accounts (44 percent), federal student loans (42 percent), and contributions from the child (39 percent).
Less commonly used methods include parent loans (19 percent), taking on a second job (17 percent), private student loans (16 percent), withdrawing from retirement accounts (10 percent), and using credit cards (10 percent). For those using federal or private student debt, the average amount families plan to borrow was $46,000.
In terms of savings, the survey found that three out of four parents (75 percent) have saved some money for their child’s education, with the average amount saved being $45,000. Notably, nearly 30 percent of parents plan to cover the full cost of their child’s education through savings alone.
Despite these efforts, less than half of the parents surveyed (49 percent) had a complete plan to cover the entire cost of college before their child enrolled. This lack of preparedness contributes to the stress associated with funding higher education, as evidenced by 78 percent of parents finding the process stressful and 71 percent surprised by the higher-than-expected costs.
Many parents (approximately two out of three) found expenses related to room and board, tuition, and fees to be more than anticipated. Additionally, around 40 percent were shocked by their child’s personal expenses.
Beyond tuition, parents in the survey said they’re also pitching in for various other costs, such as their child’s phone bill (92 percent), health insurance (91 percent), auto insurance (78 percent), and monthly stipends (42 percent).
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