Close
ThinkAdvisor

Financial Planning > College Planning > Saving for College

Even Affluent Parents Aren’t Footing the Full College Bill

X
Your article was successfully shared with the contacts you provided.

 When it comes to paying for college, the wealthy may not be as different as many may think. According to a study from BMO Private Bank released today, affluent parents – those with investable assets of $1 million or more – often do not foot the whole bill for college.

Parents pay 47% of college costs, from savings; children pay for 17%, also from savings accounts; and scholarships and relatives each pay 11%. That leaves 14%, which the study says comes from “other sources.”

“While affluent American parents plan to help their children with college expenses, they also expect their children to contribute and help pay for some of the costs,” said Darrel Hackett, president of BMO Private Bank, about the study’s findings.

The study of 493 Americans 18 years or older also found that affluent parents are more concerned about their kids securing a job and maintaining their standard of living after graduation — 51% and 46%, respectively — than about achieving high grades in college (40%).

(Check out 30 Best Paying College Majors: 2015 on ThinkAdvisor)

Getting into the right college, however, is a concern for many affluent parents. Of the 28% of parents who send their kids to private school before college, 60% said they did so to better prepare their children for college. But, as a result, a little more than one-third of those parents  (37%) said they would likely have to delay retirement to offset the costs of private school tuition.

“Private school can be an excellent alternative to public schooling,” Hackett said. “However, the costs of tuition and other related private education expenses can accumulate.”

According to its latest How America Pays for College study, Sallie Mae, the Student Loan Marketing Association, reported that families spent an average $24,164 on college, including tuition, room and board, and other indirect expenses for the 2014-2015 college year. That’s 16% more than the previous year and the largest increase in five years. Sixty percent of families didn’t borrow to pay for college, but among those who did, the student signed for about three-quarters of those loans, according to Sallie Mae.

Total college costs for the 2014-2015, including tuition, room and board and fees, are near $42,000 for a private four-year school, $11,000 for a public college or university for in-state residents and $32,800 for out-of-state residents, according to the College Board.

– Related on ThinkAdvisor: