With the cost of tuition rising every year, many parents are stepping in to help foot the bill. According to our survey of over 1,000 parents, almost half of parents want their child to avoid student debt “at all costs”, even if it means taking out loans or dipping into their own savings.
And while student debt is inevitable, a majority of parents say they will help their child pay it off.
- 48% of parents of children under 18 want their child avoid student loans “at all costs”, even at the expense of their own debt or savings. (Read more)
- Over 30% of parents with their own student debt plan to take out additional loans for their child’s college education, including parent PLUS loans or personal loans. (Read more)
- While student debt is inevitable, 73% of parents expect help their child pay their student loans. (Read more)
- Parents mainly plan to rely on their savings to help their child pays for college. (Read more)
- Almost 3 in 5 parents expect their child definitely go to college. (Read more)
48% of parents want their child to avoid student loans at all costs
Among the Class of 2019, on average, a student with loans earned $ 29,900 in student debt. But according to our survey, about half of parents want their child to be above average and leave school debt-free.
Almost half of the parents surveyed (48%) said they wanted to avoid their child taking out student loans “at all costs”, even if doing so at the expense of increasing their own debt or increasing debt. exhaustion of their savings.
Those whose parents paid for their college education in full were much more likely to say they wanted to make sure their own kids didn’t go into debt: 67% said they would compared to 39% of those parents whose families don’t pay their school.
Parents who had their own student debt were also more likely to want their children to avoid the same fate. Here, 52% said they hoped their children could avoid student debt, compared to 47% among parents who does not have owed student loans.
By comparing fathers and mothers, we also found that fathers were slightly more likely than mothers to say that they wanted to help their children avoid debt “at all costs”. (54% versus 42%).
Another 44% of all parents surveyed said they hoped their child wouldn’t have to take out student loans to pay for their education, but they acknowledged it was a possibility.
Over 30% of parents with student loans plan to take out additional loans for their child
To help their child avoid student loans, some parents consider taking on debt themselves. In total, 17% of parents said they would take out a federal PLUS parent loan, and 23% said they would take out a personal loan. Overall, 11% said they would also co-sign a student loan with their child.
These numbers were higher among parents who currently owe student loans themselves. Among borrowing parents, 30% said they would take out a parent PLUS loan, 35% said they could turn to a personal loan, and 16% said they would act as a co-signer.
At the same time, those whose parents paid the full cost of a college education were more likely to say they would pay for their children’s education.
Among parents who received parental assistance in their youth, 22% said they would take out a parent PLUS loan and 32% would turn to a personal loan. Among those who paid for their own school, these responses totaled 19% and 17%, respectively.
73% of parents plan to help their child repay student loans
While many parents hope their child won’t go into debt, in some cases it can be inevitable. If their child borrows student loans, 73% of parents plan to help with the repayment. This number was particularly high among fathers (80%) compared to mothers (68%).
Another 75% of parents would also co-sign a loan for their child if needed. Again, fathers were slightly more likely to act as co-signers, with 77% saying they would co-sign a loan for their child versus 73% of mothers.
Regardless of factors such as gender, income level, and current student loan debt, the majority of parents said they plan to help their child pay off student loans taken out on their behalf.
Parents will rely mainly on savings to help their child pay for school
Parents plan to use a variety of financing options to pay for their child’s education, with 48% saying they will rely on savings, 24% on credit cards, 23% on a personal loan and 17% % on parent PLUS loan.
Of those who will tap into their savings, only 27% use a tax-efficient 529 plan. The majority (73%) say they will dip into their savings account, and 26% will use an investment account, such as a mutual fund or IRA.
Almost a third of parents (31%) report having saved between $ 0 and $ 10,000 so far, 19% have saved between $ 10,001 and $ 20,000 and 18% have saved between $ 20,001 and $ 30,000.
Most parents feel good about how much they have saved for their child’s education. In total, 70% say they are satisfied with what they have saved. Sadly, 24% say they feel bad that they weren’t able to save more.
Almost 3 in 5 say their child will definitely go to college
Many of those parents who are thinking about how best to fund college are confident their child will attend. Overall, 59% of parents of children under 18 say their child will “definitely” go to university.
However, that number declines as household income declines: 77% of parents earning more than $ 100,000 say their child will definitely go to college, compared to 47% of parents earning less than $ 35,000.
To prepare for school fees, some parents started saving before the birth of their child (18%). Another 20% started saving when their child was less than a year old. Only 10% waited until they were 10 or older.
If you’re saving for your child’s college education, consider a 529 plan, which offers tax benefits when you use the money for qualifying education expenses. You can also explore prepaid tuition plans, which allow you to lock in future public college tuition fees at today’s rates.
Note: This is the second in our two-part series of surveys looking at parents and the cost of raising their children. You can read the first report here.