OMAHA, Neb.--(BUSINESS WIRE)--High school and college graduation season is just around the corner. It’s a season of joy and pride for graduates and their families – but more often than not, the achievement comes with a hefty price tag.
College affordability is a challenge that weighs on the minds of students and parents alike. And, for millennial parents, who are more likely to be carrying student debt than their parents were, it’s a particular pain point – one they do not intend to pass down a generation. Although the vast majority of their children are years away from graduation, most (90 percent) of these newer parents already plan to pay at least some of their kid’s college fees. That’s according to the 2,018 millennial parents and their parents who took part in TD Ameritrade's Parents and Grandparents College Savings Survey.
For this next generation of parents, paying part of Junior’s college bill is not just something they plan to do – it’s one of their top priorities. After all, one-third expect that they will still be paying down their own student loans when their children reach college. This helps explain why roughly one in five millennial parents (19 percent) say education for their children is their top financial priority, equal to the number that identified emergency savings as tops. Retirement savings came in third, at 15 percent of parents.
- Latino/Hispanic and Asian millennial parents are twice as likely as Caucasian millennial parents to expect to pay all education fees (43, 42, and 23 percent, respectively).
- Although nearly six in 10 (57 percent) millennial parents do not expect their parents to help with college fees, one in five (19 percent) grandparents contributed to a grandchild’s college savings in the past year.
- Millennial parents who are saving for their children’s education are saving an average of $310 per month, with grandparents chipping in an additional $205.
Saddled with an average of $9,100 in student debt themselves, millennial parents know all too well the high cost of a college diploma. It’s clear they want to pave an easier path for their kids, but it shouldn’t come at the expense of their retirement (for which there are no loans, grants or scholarships).
“Nearly one-third of millennial parents say they would work longer to make up the difference, but as we age, that’s not always possible,” said Dara Luber, retirement and long-term investing expert at TD Ameritrade “Their children, on the other hand, have more options to help cover the cost of college. If you’re able to swing it, parents can of course sock away money in a college fund, or ask grandparents to contribute to future education needs, rather than the toy box. Just be steadfast in your own goals. Parents are much closer to cracking open that nest egg, and you want it to be as full as possible.”
No matter the order of their financial priorities, all millennials can benefit from having a clear financial plan in place and holding themselves accountable to concrete goals along the way. Setting financial goals is key, for them and their children, to working toward a secure financial future.
About TD Ameritrade Holding Corporation
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Survey conducted by Head Solutions Group
Head Solutions Group (U.S.) Inc., is a leading market research partner for Financial Services companies in North America. With offices in New York, Toronto and Montreal, Head delivers the deep customer insights that increase institutional knowledge and propel business action. TD Ameritrade and Head Solutions Group are separate and unaffiliated firms and are not responsible for each other’s services or policies.
About the 2016 Parents and Grandparents College Savings Survey
A 18-minute online survey was conducted with 2,018 American adults (half millennial parents age 19-37, half grandparents age 50-70 with adult children) by Head Solutions Group, between Oct. 20 and Oct. 26, 2016, on behalf of TD Ameritrade Holding Corporation. The statistical margin of error for the total sample of N=2,018 American adults within the target group is +/- 2.1 percent. This means that in 19 out of 20 cases, survey results will differ by no more than 2.1 percentage points in either direction from what would have been obtained by the opinions of all target group members in the United States. Sample was drawn from major regions in proportion to the U.S. Census.
Source: TD Ameritrade Holding Corporation