Well folks, it’s as clear as daylight—most parents dream of helping their children waltz through those college gates—not just drop them off at the door. Yep, they’re singing that tune, ‘We’re right behind you, kiddo, financing your way.’ But here’s the million-dollar question: how many have a solid plan for paying the piper when the bill comes due? Let’s just say…it’s not looking good.
Just have a look at this survey by College Ave! College Ave, the holder of many a student loan, reveals some interesting numbers. They rounded up 1,000 parents whose kids are already basking in the university life. The majority, a big fat 93%, have great intentions—helping their kids through college. And three-quarters are more than just talk—they’ve started saving already. But here’s the kicker—there’s a wee bit of doubt creeping in about how they’re actually going to foot the bill.
Yes, But What Are They Saving?
The parental saving pot currently averages $45,000. Now, that’s nothing to scoff at, but let’s be real—when it’s up against tuition fees that could dwarf yours truly, it’s not going to get them far. Some universities—oh, you know the type—ask for more than $90,000 a year. So, that savings pot? It’s a drop in the ocean when it comes to covering all those fees, and maybe a room and some chow.
But let’s not throw the baby out with the bathwater. Not all colleges demand your firstborn (and second, and third) as payment for a little knowledge. Yet, even at these more ‘reasonable’ colleges, your $45,000 stash might not cut it. “Say it isn’t so!” I hear you cry. Well, the College Board has the cold, hard facts. For in-state students at public colleges, we’re talking almost $30,000 for the ’23-’24 academic year. Private colleges? Try $60,420. ‘Out of state’? Prepare to cough up around $46,730.
So, can we really blame parents for not having a definitive schooling fund strategy? Hardly! In fact, if we’re honest, fewer than half mentioned they had it all figured out. Most of them (a whopping 78%) are as tense as a long-tail cat in a room full of rocking chairs about it. And more than 70% have already been shell shocked by ‘surprise’ expenses.
Bottom line—How Are Parents Paying for College?
Fancy a glimpse into their strategy playbook? Here’s the lineup:
- Income and savings (93% are in this boat—a smart choice for sure).
- Scholarships and grants (A hopeful 62% are crossing fingers and toes).
- 529 college saving plans (44%…not a bad move).
- Federal student loans (About 42% are leaning this way).
- Student contributions (36%…Good old student sweat equity, eh?).
- Parent loans (19%. Parents, learning has no age limit).
- Taking on a second job (17% are burning the candle at both ends).
- Private student loans (16%…but lenders, hold your horses).
- Retirement account withdrawals (10% are dipping into their nest egg).
- Credit cards (And the bottom of the barrel, also 10%).
Remember, all these people have at least one child in college—so it’s not surprising to see 529 plans in the mix. If we peer at all the parents—college-aged kids or not— only about 20% use 529 accounts. Still, they’re an ace in the hole for educational costs if you can manage it.
Need some advice on handling college expenses without selling a kidney? Check out Money’s comprehensive helper, how to pay for college. And remember, picking the right college can boost your ROI. Check out Money’s Best Colleges list for schools that give you a bang for your buck.
Still here? Have at more from Money:
- Is College Worth the Money if You Need Student Loans?
- Biden’s New Student Loan Forgiveness Plan Could Cancel $150 Billion of Debt
- Does Student Loan Debt Affect Your Credit Score?
So, folks, there you have it. A bitter pill, but we’ve got to swallow it. Planning for college—it’s a tough gig, but your child’s future may depend on it.