Parents Feel Better About Student Debt
We live in an era in which college-dropouts-turned-successful-tech-entrepreneurs are celebrated, provoking debate over the value of higher education. Judging by the numbers, the role of higher education in America's future seems secure. An estimated 20.2 million students are attending U.S. colleges and universities this year - an increase of 4.9 million since 2000. By the end of this academic year, these institutions will have awarded 1.8 million Bachelor's degrees, 802,000 Master's degrees and 179,000 Doctorate degrees (Source: Digest of Education statistics).
But college is expensive and increasingly so. The College Board claims that the average cost of tuition and fees for 2015-2016 was $32,405 for private colleges, $9,410 for state residents at public colleges and $23,893 for out-of-state residents at public universities. These numbers are projected to rise annually.
Even with the rise in college costs, according to the latest annual survey conducted by Rasmussen Reports for Discover Student Loans, 82 percent of parents of college-aged children consider college to be "very important" to their child's future. These parents may be onto something.
But for some parents the benefits of college are marred by their concern about costs. So it's not surprising that 43 percent of parents of college-aged children who responded to the survey admitted that they were "very worried" about having enough money to help pay for their child's education.
For Hope Smith*, a 17-year-old from Wayne, PA, attending college was always a goal. The youngest of three children, Smith's parents have turned to a combination of grant money, gifts from relatives and mortgage refinancing to pay for college for her older siblings. Her mother says Hope will be taking out student loans, and they've had open discussions as to how they'll repay them.
Investing in the future
The survey found that many students could be missing out on an opportunity to receive federal student aid. Only 44 percent of families who responded completed the Free Application for Federal Student Aid (FAFSA®). Since most people qualify for some financial aid, completing the FAFSA is an essential step in determining eligibility for scholarships, grants, work-study and federal student loans. Use the College Covered FAFSA Assistant for tips and guidance to help you get ready to complete the FAFSA.
Most students rely on a combination of federal and private student loans to meet their needs. In fact, 55 percent of the respondents said that their child plans to use student loans to pay the bill. Among parents, 41 percent said that their child fully understood how much debt he or she would graduate with.
In fact, a study by the Board of Governors of the Federal Reserve Board found that more young people who are college-educated own homes than those who are high school graduates, and that this is true regardless of whether or not the graduates carry debt from student loans. (Source: "Student Loans and Home Ownership Trends," Board of Governors of the Federal Reserve System, 2014)
Parents still believe that earning potential after graduation is important. Seventeen-year-old Arielle Telemaco-Beane*, a high school senior from Queens Village, New York, dreams big. She wants to be an actress and is planning to study drama. Arielle's mother is keenly aware that finding work in theater has its challenges, so she's encouraged Arielle to have a backup plan in place, by minoring in a more practical field, coding.
Closing the gap
Aspiring nurse Hope Smith is planning to attend college in Pennsylvania in the fall. Her mother says while student loan debt is a factor in her children's lives, attending college is a necessity "for them to be successful, they need to go to college. It's worth it. It's something that no one can ever take away from you."
*Hope Smith and Arielle Telemaco-Beane were compensated by Discover Student Loans for their appearance in this content. The opinions and words they express are their own.
FAFSA is a registered service mark of the U.S. Department of Education.
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