One-third of parents said they are in a worse financial position to help pay for college versus last year
A national survey from Discover® Student Loans revealed that a majority of parents with college-bound children are worried about having enough money to pay for their child’s education.
According to survey findings, more parents feel financially unprepared to pay for college this year than in previous years with nearly three-quarters (70%) worried about having enough funds, compared to 66% last year and 63% in 2021. While there are multiple contributing factors to the feelings of financial worry, parents indicated a few key reasons, including inflation straining savings and spending (48%); not starting to save early enough (46%); and rising tuition costs (43%).
Overall, more than one-third (36%) of parents said they are in a worse financial position to help pay for college versus last year. And the financial worries extend beyond parents’ bank accounts. For many of these families, children’s college decisions are also ultimately affected:
How have your child's school choices changed now that you are in a worse financial position?
My child now must look into scholarship/financial aid options
My child is now only able to look at schools with in-state tuition
My child is now only able to look at schools that allow a daily commute from home
The value of college – inflation and tuition costs are creating uncertainty
While many parents feel that college is necessary to find a good job (73%), nearly half of parents (46%) are questioning whether college is still a good investment. With rising inflation and tuition costs, 68% of parents surveyed are nervous about the amount of debt their children will take on compared to their post-college career earnings.
“As college costs continue to rise, students and their families need to make sure the school and program their child selects will lead to a meaningful job in their chosen field with a healthy salary,” said Rich Finn, vice president of Discover Student Loans. “Families should aim to have conversations early and often about college costs and job and salary prospects after graduation.
Parents and students look to scholarships and loans as college costs rise
Overall, fewer parents are able to cover the full cost of college compared to last year. Less than one-third (27%) of parents say they will help pay for all of their child’s education, down from 39% in 2022. As such, more families are turning to other ways to ease the cost of college, like scholarships. In fact, 61% of respondents said they will use scholarships and grants to help pay for their child’s education, up 7 points from 2022 and up 14 points from 2021.
In addition to scholarships, more families are considering student loans to cover college costs. This year, nearly half (45%) of surveyed parents said they will use student loans to pay for their children’s education, up 4 points and 18 points from 2022 and 2021, respectively. Of parents who said they will use loans to help pay for college, 55% indicated they plan on using a combination of federal and private student loans; 42% selected federal student loans only.
“We want families to feel as prepared as possible to pay for college,” said Finn. “To support families, Discover Student Loans offers a scholarship search tool on our website that provides free access to over three million scholarships. If families need a private student loan, we also have a free student loan calculator to help them estimate how much they need to borrow and what their monthly payments would look like.���
About the Survey
All figures, unless otherwise stated, are from a Dynata (formerly Research Now/SSI) survey conducted on behalf of Discover Financial Services. The survey was conducted online and fielded by Dynata with a total sample size of 1,000 parents of children ages 16-18 who plan on attending college or trade school. The margin of sampling error was 3 percentage points with a +/-5 percent level of confidence.
Discover Financial Services (NYSE: DFS) is a digital banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company issues the Discover® card, America's cash rewards pioneer, and offers private student loans, personal loans, home loans, checking and savings accounts and certificates of deposit through its banking business. It operates the Discover Global Network® comprised of Discover Network, with millions of merchants and cash access locations; PULSE®, one of the nation's leading ATM/debit networks; and Diners Club International®, a global payments network with acceptance around the world. For more information, visit www.discover.com/company.