RIVERWOODS, Ill.--(BUSINESS WIRE)--The third annual survey from Discover Student Loans reveals that while 96 percent of parents continue to see the value of a college education, 85 percent are very or somewhat worried that student loan debt will affect their child’s ability to buy a home, car or other large purchase after college.
Although parents are concerned about student loan debt, they appear less likely to include the price of a university in the decision-making process. Forty-eight percent of parents said that cost would not be a factor when choosing a college, an 8 percent increase from 2013. Forty-four percent of parents said they were planning to limit college choices based on price and 9 percent were not sure, both decreases from the previous year.
“It is promising to see families recognize the investment in a college education and are considering their children’s long-term financial health beyond graduation,” said Danny Ray, president of Discover Student Loans. “We hope that this annual survey brings to light the need for families to review all of their options when going to college. We encourage students to always use free money first when financing a college education and then, if needed, determine what lending options work best for their needs.”
Parents Still Worry about Cost
Seventy-seven percent of parents said they plan to help their child pay for college, a slight decrease from 81 percent in 2013. Sixteen percent of families don’t plan on contributing anything.
While families want to help pay for college, parents routinely said they are worried about having enough money. Throughout the last three years, numbers have remained fairly consistent with three out of four families saying they are very or somewhat worried about having enough money to cover college costs. A quarter of parents are not very or not at all worried about having enough money.
Parents also are not limiting their financial support based on what course of study their child chooses. More than half of parents, 53 percent, said choice of major and earning potential played no part in their decision to fund their child’s education, while 33 percent of parents plan to limit funding based on their child’s major.
Parents Shift Repayment to Students
The number of parents who say their child should pay for most or all of their college education has increased for the past three years. In 2014, 15 percent of parents responded saying their children should pay for the entire cost of college, compared to 12 percent in 2012. Thirty-two percent of parents think their child should pay for most of their schooling, compared to 27 percent in 2012.
Parents also are split on whether they will assist their child with repayment. Only 52 percent say they are likely to help their child repay loans, with 24 percent saying very likely and 28 percent say somewhat likely, compared to 58 percent in 2013.
When asked about student loans, 52 percent of parents said their child plans to take out student loans to pay for college, with 48 percent planning to use both federal and private student loans.
“As students prepare to enter college this fall, it’s important for parents to have clear and honest discussions with their children about how they’ll pay for college,” Ray said. “Students need to understand the financial responsibilities they take on and, more importantly, who is responsible for repayment of loans upon graduation.”
Financial Resources at College
As parents seek to determine the right mix of funding for their child, 44 percent cite college financial aid offices as the most trusted resources for information-the third consecutive year where they have ranked the highest. Fourteen percent of parents turn to personal financial advisors and 9 percent to friends and family. High school guidance counselors rank slightly higher than the internet when gathering reliable information about college, at 7 and 6 percent respectively, according to the survey.
About the Survey
The Discover national survey of 1,000 adults who have children 16 to 18 years old who are planning to attend college was conducted May 15-20, 2014, by Rasmussen Reports, an independent survey research firm (http://www.rasmussenreports.com). The margin of sampling error was +/-3 percentage points with a 95 percent level of confidence.
Discover Financial Services (NYSE: DFS) is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company issues the Discover card, America's cash rewards pioneer, and offers home loans, private student loans, personal loans, home equity loans, checking and savings accounts, certificates of deposit and money market accounts through its direct banking business. It operates the Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in more than 185 countries and territories. For more information, visit www.discover.com/company.
National survey of 1000 adults with children 16 to 18 years old who have children planning on going to college
Conducted May 15-20, 2014 By Rasmussen Reports
Margin of sampling error: +/- 3 percentage points with a 95 percent level of confidence
Commissioned by Discover Student Loans
|2014||2013||2012||How important is college to your child’s future?|
|3%||1%||3%||Not very important|
|1%||0%||1%||Not at all important|
|2014||2013||2012||Beyond tuition, how knowledgeable do you feel about the entire cost of a college education?|
|8%||9%||11%||Not very knowledgeable|
|2%||3%||2%||Not at all knowledgeable|
|2014||2013||2012||Will you be helping your child pay for his/her college education?|
|2013||2012||How worried are you about having enough money to help pay for your child’s college education?|
|18%||15%||17%||Not very worried|
|7%||6%||6%||Not at all worried|
|2014||2013||2012||How much of your child’s education can you afford?|
|21%||21%||24%||None of it|
|30%||29%||29%||Up to 25%|
|19%||18%||15%||Up to 50%|
|11%||12%||10%||Up to 75%|
|11%||11%||13%||All of it|
|2014||2013||2012||Where will most of the money come from to pay for your child’s college education?|
|11%||11%||12%||529 savings plan|
|5%||6%||5%||A second job|
|2%||3%||3%||2nd mortgage or refinance|
|10%||12%||13%||Some other source|
|2013||How knowledgeable are you on the difference between federal and private loans? *|
|22%||24%||Not very knowledgeable|
|7%||6%||Not at all knowledgeable|
|2014||2013||Is your child planning to use student loans to pay for their college education? *|
|2014***||2013||Does your child plan to use federal student loans, private loans or a combination of both? *|
|48%||54%||A combination of both|
Which do you consider the most reliable source of information on paying for college?
|7%||6%||7%||Guidance counselors in high school|
|44%||47%||47%||Financial aid offices of colleges|
|3%||3%||3%||Banks and other lenders|
|14%||13%||11%||Personal financial advisors|
|9%||8%||6%||Friends and family|
|8%||8%||8%||Some other source|
|2014||2013||2012||How much responsibility should your child have in paying for their education?|
|15%||13%||12%||All of it|
|32%||29%||27%||Most of it|
|43%||48%||48%||Some of it|
|8%||7%||10%||None of it|
|2013||If you are taking out loans in your child’s name, does your child understand how much debt they will graduate with? *|
|2013||2012||If your child had to rely on student loans or other types of loans for college, how likely are you to help them pay back the loans? *|
|30%||25%||28%||Not very likely|
|12%||13%||13%||Not at all likely|
Is earning potential after graduation more or less important to your child’s education than his or her major?*
|30%||31%||21%||About as important|
|2013||Are you limiting your child’s college choice based on price?*|
|2013||Are you more likely to help fund your child’s education if they major in a field that has a higher likelihood of them landing a job? *|
|How worried are you that student loan debt may affect your child’s ability to buy a house, car or some other large purchase after graduation? **|
|12%||Not very worried|
|3%||Not at all worried|
* not asked in 2012
** not asked in 2012 or 2013
*** answered by 517 respondents who said their child was planning to use student loans to pay for their college education