Growing Number of Parents Expect Their Kids to Pay for College
Student loan debt can be a killer, accounting for the most U.S. consumer debt in any category other than mortgages. Nearly 58% of graduates of four-year nonprofit public and private colleges in 2017 owed money. One estimate from last year put the total amount due at $1.532 trillion, and a study from early 2019 estimated that student debt stopped 400,000 potential home sales.
Things are only going to get worse for students. A new survey by Discover Student Loans has found that only 28% of parents now say they plan to cover the entire cost of their child’s higher education, down from 34% last year, while 38% expect their offspring to pick up more than half the tab, up from 31% in 2018. This will have a particularly strong impact in places where graduates are already burdened by extreme debt. These are the states where students graduate with the most debt.
The survey also reveals that parents are increasingly worried about how to meet whatever share of the costs they do assume. Last year, 55% of parents admitted that they were worried about having enough money to help pay for college, while this year the number was 65%.
At the same time, though, the percentage of parents surveyed who plan to use savings to help finance their child’s college years has declined from 51% in 2018 to 41% this year.
That said, 75% of parents are concerned that college costs will impact their own financial situation, with 35% saying they expect to give up vacation or entertainment spending and 32% predicting that they might have to retire later than planned to help pay the bills. At the same time, some 58% are relying on scholarships or grants to help meet the costs.
The survey, which reached out to 1,501 parents of U.S. college-bound students aged 16 to 18, was conducted online by the data firm Dynata.
One way to save money for college is to live at home even after the age of 18. The rate of younger adults living with their parents varies widely from state to state. In some areas, nearly half of 18-34 year olds are now living with their parents. These are the states where the most people still live with their parents.