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August 17, 2016 at 10:12 AM
A great disparity exists between how much children think their parents will contribute to their college education and how much parents are able to do so, new research by T. Rowe Price found.
Student loans in many instances can lead to more anxiety and financial stress on parents.
MetrixLab in February surveyed 1,086 parents with children eight to 14 years old, and an equal number of children in that age group.
The Disconnect
Sixty-two percent of children in the survey agreed with this statement: “I expect my parents to cover the cost of whatever college I want to go to.”
In reality, 35% of parents said they would be able to pay for at least most of college costs, and just 12% said they would be able to pay the entire cost.
Two-thirds of children thought their parents were saving for their college, but nearly a quarter of those had parents who said they were not.
Sixty-three percent of parents acknowledged that they felt guilty about not being able to pay more for their children’s college, and 42% said they lost sleep worrying about college costs, up from 28% in 2014 in a T. Rowe Price study.
Seventy-six percent of parents in the poll said they would willingly delay their retirement and 68% would take a second or part-time job to pay for their children’s college education.
Call it denial, or perhaps lack of research, but only 35% of parents in the study understood that the total cost of a four-year college education at an in-state school was $80,000 or more, a figure researchers used based on College Board data.
Student Loan Albatross
For many parents, student loans are an added source of anxiety and financial stress.
Twenty percent of surveyed parents reported that they were paying back student loans for their own education, and 12% were doing so for their children’s education. Five percent were shouldering both burdens.
The poll found that 67% of parents who were paying off student loans from their own education had credit card debt, compared with 54% of parents who were not so burdened, and 19% had payday loans, compared with 7%.
Those parents who were paying back loans for their children’s education were even likelier to have credit card and payday loan debt—75% vs. 54% and 38% vs. 5%.
Fifty-seven percent of parents said they were willing to borrow $25,000 or more to pay for their children’s college education, with 19% willing to borrow $100,000 or more.
