Given the rising cost of tuition and fees, paying for college has long been a significant challenge for American families. As you might expect, the COVID-19 pandemic has only made it harder.
A little more than half of families report that because of the pandemic, affording higher education is an even taller task than usual, according to a new College Ave Student Loans survey of 1,000-plus parents of undergraduates.
Likewise, with finances crunched, parents said their plan for footing the bill has changed, with 45% reporting they’ll have to borrow more in student loans.
Families concerned about keeping pace with college costs
Since the 1960s, the average college tuition has risen at more than twice the clip of consumer inflation. Covering these costs has grown progressively more difficult over time. Throw in a pandemic that’s hindered the economy, and it’s easy to see why 85% of parents polled said they would find it even harder to afford college in 2021.
With job losses, medical bills and other financial challenges caused by COVID-19, parents may no longer have the financial means reflected in their previously-filed Free Application for Federal Student Aid, the form used to decide who gets government grants, scholarships and work-study slots, as well as student loans.
For their part, financial aid offices have expected a greater-than-normal number of families to appeal their aid packages due to the pandemic. The survey found many parents were "actively seeking clarity and information" about what to do next, and 2 out of 3 parents said they wished there were more accessible resources to help them plan for college costs.
More student loans to make up for lack of college savings
Despite the pandemic, recent research has found that most Americans still feel in control of their finances. But families who have experienced cash-flow problems are in a particularly tough spot regarding paying for college. They may no longer have the income or savings they had earmarked to cover at least some of college.
According to the survey, 45% of parents said the pandemic had affected their payment methods for college. As a result …
- 51% planned to use more savings
- 45% felt they need take out additional student loans
- 27% were eyeing parent-issued loans
More than 3 in 4 parents (78%) reported socking away funds for their children’s education, but only 17% said their savings would meet the schools’ full cost of attendance.
Parent PLUS loans through the federal government and parent loans available from private lenders could become a top option for parents who don’t want their kids to borrow in their own name.
At the same time, however, parents taking on too much education debt could hinder their personal financial goals, such as retirement planning. The pandemic has already caused many consumers to borrow from their retirement accounts, according to a survey earlier this year.
Parents still believe higher education worth the high price tag
Considering the challenges of paying for school, parents everywhere appear to still value college as an investment. About 93% of parents polled said they believed their children earning a degree was "more important than ever."
In addition to negotiating financial aid packages, parents should exhaust every available option before borrowing student loans, whether in their name or their child’s. Unfortunately, about two-thirds reported that securing scholarships had proved to be a stumbling block.
Families can get ahead by taking a team approach. Encouraging students to apply for private scholarships and state grants — as well as taking on summer jobs — could all be useful strategies. Nearly 7 in 10 survey respondents said they expected their son or daughter to at least "chip in" for college costs.
Methodology: The survey, commissioned by College Ave and conducted by Barnes & Noble College Insights in December 2020, collected 1,009 responses from parents of undergraduate students attending a four-year college or university.