When it comes to their kids’ college education, 50% of parents are more concerned with the school’s academic standing than other factors when figuring out which school is the best fit for their child, according to a new Discover national survey. And for 31%, the academics is the deciding factor in their decision.
While cost is not one of the top factors when picking out a school, parents are definitely thinking about their finances, with 74% saying that they are very or somewhat worried about whether or not they will have enough cash on hand to pay for school. How will they pay for it? For 29% the answer is student loans, while 27% will be using their savings, and 13% will use the money they put away in a 529 savings plan.
Will parents help their kids pay down their student loans? For many, the answer is yes, but when It comes to retirement 59% are very or somewhat concerned that helping out with their kid’s student loan debt will take its toll on their retirement plans.
According to Discover filling out the Free Application for Federal Student Aid [FAFSA] could be a big help in making college more affordable. “Our survey showed that only 45% of parents filled out the FAFSA, which means families could be missing out on grants and scholarships that do not need to be paid back. We encourage all families to complete the FAFSA regardless if they think they’ll qualify,” said Mike Boush, senior vice president of Discover Student Loans.
Helping pay down loans
While parents are concerned about their finances, 74% plan on helping out when the time comes for their children to pay down their student loans, but they won’t be footing the entire bill. In the study 86% believe that their child should help out.
According to Discover, talking is one of the keys to working this out. “It’s important for children to learn strong financial habits especially if they’re going to share in the responsibility of paying for college,” said Boush.
“Our survey showed that nearly a third of parent’s responded saying they could only afford up to 25% of their child’s education, so it’s clear that parents and students will need to discuss how to fill that gap. Having these conversations around paying for college is a great first step to helping children learn how to manage their finances,” he said.
The Discover national survey was conducted by Rasmussen Reports, an independent survey research firm between March 17 and 20, 2017. They spoke with 1,000 adults with children between the ages of 16 and 18 years old.