Higher education is an important priority for parents, so much so that they’re willing to go into debt and forgo their own retirement savings to pay for it. HSBC surveyed more than 6,240 parents in 15 countries and found 60% would go into debt to pay for their children’s education.
The same percentage of U.S. parents agreed. However, U.S. parents spend almost twice as much as the global average: $14,678 a year, compared with $7,631. Least likely to take on debt were parents in the U.K. (43%), Australia (44%) and France (46%).
Furthermore, 37% of parents say education funding is more important than saving for retirement, and more than a quarter say it’s the last thing they’d cut back on, after paying the mortgage, household bills or credit card payments.
This is troubling considering most parents aren’t waiting until the last minute to start planning. Over two-thirds start making financial decisions related to their children’s education before they reach primary school. Almost a quarter started when their child was born, and 15% were thinking about it even before their child was born.
Still, 61% of parents are paying for their children’s education from their day-to-day income, and 58% said it makes meeting other financial obligations difficult.
“Our survey tells us that three in five parents in the U.S. start planning for funding their child’s education before they even started school, yet a similar proportion end up funding it from day-to-day income. It seems planning and taking action are not necessarily going hand in hand,” Michael Schweitzer, group head of sales and distribution of HSBC, told ThinkAdvisor in an email. “This in turn can make it harder for parents to juggle between their several financial commitments, and prevents them from putting money away to support their children’s studies in the longer term. Starting to save or invest early, even small amounts, can help bridge the funding gap.”