NEW YORK--(BUSINESS WIRE)--With high school graduation season soon to end, many college-bound young adults and their parents are facing the rising cost of higher education and thinking about how to tackle these financial burdens both in the future and the here-and-now.
The majority (60%) of parents would be willing to go into debt to fund their child’s college education, according to Foundations for the future, the latest report in The Value of Education series from HSBC Group. Based on a survey of over 6,200 parents in 15 countries, the report reveals that in the United States, parents who are younger than 34 are more likely to consider borrowing to pay for a child’s education (74%) compared to those over the age of 35 (56%).
With 98% of US parents considering a college education for their child, how to fund that education is top of mind for many parents. Fifty-eight percent of parents express that paying for their child’s education makes it more difficult to keep up with other financial commitments and consider this expense more important than long-term savings (40%), credit card repayment (37%), and retirement savings (37%).
American parents surveyed spend an average of $14,678 per year to fund a child’s college education— almost double that of the world average of $7,631. Although this number is seemingly high, students in the US pay 37% of the college bills -- one of the highest contribution rates in the world (37%) and second only to Canada (39%). Egypt (less than 1%), India (1%), Hong Kong (4%) and Singapore (5%) have the lowest student contribution rates globally.
With both parents and students contributing more than the global average, it is critical to start financial planning early to determine how much education will cost and the best ways to fund it.
Commenting on the findings, Charlie Nunn, HSBC Group’s Global Head of Wealth Management said:
“The financial sacrifices that parents are willing to make to fund their children’s education are proof of the unquestioning support they will give to help them achieve their ambitions. However, parents need to make sure that this financial investment is not made to the detriment of their own future wellbeing.
“By having a financial plan to meet their family’s overall needs and reviewing it regularly, parents will be better placed to support their children’s studies without compromising on their own long-term financial goals,” said Nunn.
Based on these findings, practical steps to planning for the future include seeking professional advice to plan early for a child’s post graduate education, considering opportunities abroad to enhance a child’s educational experience and teaching children from an early age to be financially responsible.
Below is a snapshot of some of the relevant data. The complete Foundations for the future report can be found here.
|Average amount parents say they are spending towards their child’s college education||% of parents willing to go into debt to fund their child’s college education|
Notes to editors
The Value of Education Foundations for the future report was published in June 2016 and represents the views of 6,241 parents in 15 countries and territories around the world: Australia, Canada, China, Egypt, France, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore, Taiwan, United Arab Emirates, United Kingdom and United States. The findings are based on a survey of parents from a nationally representative sample in each country who have at least one child aged 23 or younger currently (or soon to be) in education. Over 350 parents (including 150 with a child at university or college) were surveyed in all countries. The research was conducted online by Ipsos MORI in February and March 2016, with interviews in Egypt conducted face-to-face.
HSBC Bank USA
HSBC Bank USA, National Association (HSBC Bank USA, N.A.), with total assets of US $183.1bn as of 31 December 2015 (US GAAP), serves 2.4 million customers through retail banking and wealth management, commercial banking, private banking, asset management, and global banking and markets segments. It operates more than 229 bank branches throughout the United States. There are over 145 in New York as well as branches in: California; Connecticut; Delaware; Washington, D.C.; Florida; Maryland; New Jersey; Pennsylvania; Virginia; and Washington. HSBC Bank USA, N.A. is the principal subsidiary of HSBC USA Inc., an indirect, wholly-owned subsidiary of HSBC North America Holdings Inc. HSBC Bank USA, N.A. is a Member of the FDIC.
HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 6,000 offices in 71 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,596bn at 31 March 2016, HSBC is one of the world’s largest banking and financial services organizations.