With the cost of college tuition increasing every year, many parents are stepping in to help foot the bill. According to our survey of more than 1,000 parents, nearly half of parents want their child to avoid student loan debt “at all costs,” even if it means taking on loans or dipping into their own savings.
And if student debt is unavoidable, a majority of parents say they will help their child pay it off.
- 48% of parents with kids under 18 want their child to avoid student loans “at all costs,” even to the detriment of their own debt or savings. (Read more)
- More than 30% of parents with their own student loan debt plan to take out additional loans for their child’s college education, including parent PLUS loans or personal loans. (Read more)
- If student debt is unavoidable, 73% of parents plan to help their child pay off their student loans. (Read more)
- Parents mainly plan to rely on their savings to help their child pay for college. (Read more)
- Nearly 3 in 5 parents expect that their child will definitely attend college. (Read more)
Among the class of 2019, on average, a student with loans graduated owing $29,900 in student debt. But according to our survey, about half of parents want their child to beat the average and leave school debt-free.
Nearly half of all parents surveyed (48%) said they want to avoid their child taking on student loans “at all costs,” even if accomplishing this comes at the expense of expanding their own debt or depleting their savings.
Those whose own parents paid for their college education in full were significantly more likely to say they wanted to make sure their own kids didn’t take on debt: 67% said they would do this versus the 39% of those parents whose families did not pay for their school.
Parents who had student debt of their own were also more likely to want their kids to avoid the same fate. Here, 52% said they hoped their kids could avoid education debt, compared to 47% among parents who didn’t owe student loans.
When comparing dads and moms, we also found that fathers were a bit more likely than mothers to say they wanted to help their kids avoid indebtedness “at all costs.” (54% versus 42%).
An additional 44% of all parents surveyed said they hoped their child didn’t have to take out student loans to pay for college, but they acknowledged that it was a possibility.
To help their child avoid student loans, some parents are planning to take on debt themselves. In total, 17% of parents said they’d take out a federal parent PLUS loan, and 23% said they would take out a personal loan. Overall, 11% said they would also cosign a student loan with their child.
Those numbers were higher among parents who currently owe student loans themselves. Among parent borrowers, 30% said they would take out a parent PLUS loan, 35% said they might turn to a personal loan and 16% said they’d act as a cosigner.
At the same time, those whose own parents paid for their college costs in full were more likely to say they would shoulder their children’s education.
Among parents who received parental assistance in their youth, 22% said they’d 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.
While many parents hope their child doesn’t have to take on debt, that might be unavoidable in some cases. If their child does borrow student loans, 73% of parents plan to help with repayment. That number was especially high among fathers (80%) versus mothers (68%).
A further 75% of parents would also cosign a loan for their child if necessary. Again, fathers were slightly more likely to act as cosigners, with 77% saying they would cosign a loan for their child versus 73% of moms.
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 in their name.
Parents plan to use a variety of financing options to pay for their child’s education, with 48% saying they’ll rely on savings, 24% on credit cards, 23% on a personal loan and 17% on a parent PLUS loan.
Among those who will draw on their savings, only 27% are using a tax-advantaged 529 plan. The majority (73%) say they’ll draw on money in their savings account, and another 26% will use an investment account, such as a mutual fund or IRA.
Nearly one-third of parents (31%) say they’ve saved somewhere 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 are feeling good about how much they have saved for their child’s education. In total, 70% say they feel good about how much they have saved. Unfortunately, 24% say they feel bad they haven’t been able to save more.
Many of these parents who are thinking about the best way to finance college are confident their child will attend. Overall, 59% of parents with kids under 18 say their child will “definitely” go to college.
This figure drops as household income decreases, however: 77% of parents earning more than $100,000 say their kid will definitely go to college, compared to 47% of parents earning less than $35,000.
To prepare for college costs, some parents started saving before their child was born (18%). Another 20% began saving when their child was less than a year old. Only 10% waited until the age of 10 or older.
If you’re saving for your kid’s college education, consider a 529 plan, which offers tax benefits when you use the money on qualified education expenses. You might also explore prepaid tuition plans, which let you lock in future tuition at public colleges at today’s rates.
Note: This is the second of our two-part series of surveys looking at parents and the cost of their children’s education. You can read the first report here.