More than half of American parents are willing to take out loans to pay for their child’s college education, a new survey conducted by COUNTRY Financial has found.
Nearly 56 percent of surveyed parents, especially men, said they would be willing to incur an average debt of $31,000 to cover the cost of their child’s college education, with four in 10 parents admitting that having a child is more expensive than they anticipated.
The survey found that 36 percent of Americans start saving for college when their child is the age of five years or younger. However, on average, the efforts of the majority of the parents are still not enough to cover the full cost of tuition, as only 18 percent of parents reported that their contribution covered 81 to 100 percent of their child’s education costs.
Six in 10 parents predict that they will only be able to cover 60 percent or less of their child’s college education costs.
“Parents obviously want to do whatever is in their power to help their children get a leg up in life,” Doyle Williams, an executive vice president at COUNTRY Financial, said. “Even if you plan to assist your child with the financial costs associated with college, our survey’s findings show that the majority of families are not able cover the full tuition costs out-of-pocket.”
Parents are also struggling to pay off their own student debts. 55 percent of those surveyed said it would take or has taken five years or longer to pay off their loans, and about 7 percent of parents predict that they won’t be able to pay off their student loans in their lifetime.
More than half of American parents are also making financial sacrifices such as cutting back on vacations, using savings, borrowing money or undertaking part-time jobs to afford extracurricular activities like SAT or ACT prep classes, private sports, music, language or art lessons and hiring an academic tutor to improve the chances of their child getting into a top-tier college.
Recent years have seen a sharp jump in tuition rates at colleges across the country as well. According to a Trends in Student Aid and Trends in College Pricing report, for full-time, out-of-state students at public four-year colleges and universities, tuition and fees rose from $25,670 in 2017-18 to $26,290 in 2018-19. For in-state students, these rates rose from $9,980 in 2017-18 to $10,230 in 2018-19. The tuition and fees at private nonprofit four-year institutions rose from $34,700 in 2017-18 to $35,830 in 2018-19.
These tuition increases have forced students to take out more loans to pay for college, frequently leaving them in a debt trap.
Studies have found that student debt mostly affects borrowers of color. According to a recent Demos report, most Black, Native American, Latino, and students belonging to more than one race, including white females, fail to make a dent on their original balance owed on federal loans 12 years after beginning college.
Last year, a study conducted by the University of Illinois and the University of Michigan also found that Black and Hispanic adults who graduate college with debt burdens have a significantly lower net worth at the age of 30 than students who don’t borrow to pay for college.
