Discover Student Loans recently conducted their third annual survey of 1,000 parents with children aged 16 to 18 who are planning on college. The results are informative, as always, but have me wondering if we need to rethink how we’re thinking about college and if one of the most important aspects of college choice – the cost – is falling by the wayside and not being weighted as heavily as it should. First let’s take a look at the study findings and then discuss how this should inform college selection.
Discover Student Loans Survey Results
85% of parents said college is “very important” to their children’s future. What’s interesting is that this is down 2% from the prior year and that 2% seems to have migrated to the very different answer of “not very important.”
Less than half of parents said they feel they are “very knowledgeable” about how much college truly costs beyond tuition. A little less than half rated themselves as “somewhat knowledgeable.” 8% rated themselves as “not very knowledgeable”
77% of parents told Discover they would be helping be helping their child pay for college and 16% said now. This is a 4% change from last year when 81% said they’d help pay and just 12% said they wouldn’t be helping foot the bill.
Less than half of parents (44%) are “very worried” about having enough money to pay for college, 30% are “somewhat worried” and 18% are “not very worried.” The very worried and somewhat worried numbers are both down from last year.
21% of parents admit they can’t afford to pay for any of their children’s college costs and 30% say they can pay up to one-fourth of the costs. 19% say they can afford half and 11% say they can pay three-fourths and another 11% say they can pay it all.
The bulk of parents plan to tap into family savings and student loans to pay for school. 29% responded in each of these categories. Just 11% said they planned on using a 529 plan. Others planned to take a second job, tap into retirement or take a second mortgage.
52% of respondents said their children would be using student loans to pay for college and 48% said they would use a combination of federal and private student loans yet 40% ranked themselves as only “somewhat knowledgeable” about the difference between the two.
A little less than half of parents said they were not limiting college choice based on price yet 55% are very worried that student loan debt could affect their kid’s post-college finances and ability to buy a house or make other major purposed.
Concerns About Survey Findings and Rethinking College Choice
At a glance, the major concerns are that most parents don’t consider themselves experts on college costs or student loans, are worried about the impact of student loans yet the majority aren’t limiting college choice based on cost. When we go to buy a house or car, we are much more likely to buy only what we can reasonably afford, but is this because lenders cap us while student loan lenders are more lenient or because we’re making a smart choice?
In reality, it may be more practical to think of a college education the same way we would any commodity we’re buying. Affordability should be a key consideration and it doesn’t seem to be foremost in the decision making process about college because student loan maximums are generous and parent PLUS loan and private loans are readily available. This survey leads me to think that we need to be much more price tag conscious than we currently are. And if we vote with our wallets, this will incent colleges to control costs.
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