Importance of College Increases for Parents; Three Out of Four U.S. Families Worry About Ability to Cover College Costs
RIVERWOODS, Ill. --(BUSINESS WIRE)--Aug. 15, 2013-- The number of parents with college-bound teens who see value in a college education has increased from a year ago, according to a yearly survey commissioned by Discover Student Loans. The independent poll found that 87 percent of parents say college is “very important” to their children’s futures, up from 81 percent in 2012. Those parents who say a college education is only “somewhat important” dropped from 14 percent to 11 percent over last year.
Eighty-one percent of parents plan to help pay for their children’s college education, an increase from 74 percent a year ago. But a willingness to pay doesn’t correspond to an ability to pay. Seventy-nine percent of families are very or somewhat worried about having enough money to contribute, compared to 75 percent last year.
“We’re encouraged that parents continue to see the life-long benefits of a college education,” said PK Parekh, vice president for Discover Student Loans. “But it can be overwhelming to figure out how to pay for college. Discover encourages parents and students to plan early and maximize grants, scholarships and other free financial aid. If free money and family savings aren't enough, then families should compare federal and private student loans to see which kinds of loans are best to cover the gap.”
Understanding Federal vs. Private Student Loans
Twenty-nine percent of parents said that most of the money to pay for college will come from student loans, followed by 27 percent mostly from family savings and 11 percent mostly from 529 savings plans, all of which are largely unchanged from last year.
Half of parents said their children plan to use student loans, with 54 percent planning to use a combination of both federal and private student loans, 32 percent just using federal, 4 percent just using private, and 10 percent not sure.
When it comes to student loans, understanding the differences between federal and private student loans can help families determine what suits them best. While 68 percent of parents said they were very or somewhat knowledgeable about the differences, and 30 percent were either not very, or not at all knowledgeable.
“Interest rates, origination fees, and repayment options are some of the things to consider when choosing between federal and private student loans,” said Parekh. “Families also should consider the entire cost of a college education, beyond just the first year of school, so they fully understand the financial responsibilities they are taking on. Being aware of all the costs involved will help families better prepare and anticipate monthly payments.”
Student Loan Debt and Repayment
Parents are still likely to help their children pay back any loans they may use for college, with 58 percent saying they are very or somewhat likely to help pay, up slightly from 55 percent in 2012.
Forty percent of parents think their children fully understand the amount of debt they will graduate with after college, while 32 percent think they children will somewhat understand and 15 percent don’t think their children understand at all.
Finding Trusted Information
Parents continue to trust college financial aid offices for reliable information on paying for college. The year-over-year numbers were unchanged showing 47 percent of parents consider college financial aid offices the most trusted places for information, while 13 percent said personal financial advisors and 8 percent said friends and family.
The national survey of 1,000 adults with college-bound children 16 to 18 years old was commissioned by Discover Student Loans and conducted by Rasmussen Reports, an independent survey research firm (http://www.rasmussenreports.com), July 29 to 31, 2013 . The margin of sampling error was +/-3 percentage points with a 95 percent level of confidence.
About Discover
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.
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National survey of 1000 adults with children 16 to 18 years old who have children |
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planning on going to college |
| Conducted July 29-31, 2013, By Rasmussen Reports |
| Margin of sampling error: +/- 3 percentage points with a 95 percent level of confidence |
| Commissioned by Discover Student Loans |
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2013 |
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2012 |
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How important is college to your child’s future? |
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87% |
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81% |
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Very important |
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11% |
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14% |
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Somewhat important |
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1% |
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3% |
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Not very important |
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0% |
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1% |
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Not at all important |
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0% |
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1% |
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Not sure |
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Will you be helping your child pay for his college |
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2013 |
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2012 |
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education? |
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81% |
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74% |
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Yes |
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12% |
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15% |
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No |
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8% |
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11% |
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Not sure |
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How worried are you about having enough money to |
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2013 |
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2012 |
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help pay for your child’s college education? |
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47% |
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47% |
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Very worried |
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32% |
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28% |
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Somewhat worried |
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15% |
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17% |
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Not very worried |
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6% |
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6% |
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Not at all worried |
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0% |
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1% |
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Not sure |
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2013 |
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2012 |
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How much of your child’s education can you afford? |
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21% |
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24% |
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None of it |
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29% |
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29% |
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Up to 25% |
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18% |
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15% |
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Up to 50% |
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12% |
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10% |
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Up to 75% |
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11% |
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13% |
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All of it |
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9% |
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10% |
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Not sure |
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Where will most of the money come from to pay for |
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2013 |
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2012 |
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your child’s college education? |
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11% |
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12% |
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529 savings plan |
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27% |
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24% |
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Family savings |
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29% |
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28% |
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Student loans |
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6% |
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5% |
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A second job |
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3% |
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3% |
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2nd mortgage or refinance |
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4% |
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4% |
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Retirement funds |
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12% |
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13% |
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Some other source |
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10% |
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11% |
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Not sure |
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How knowledgeable are you on the difference between |
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2013 |
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federal and private loans? * |
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29% |
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Very knowledgeable |
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39% |
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Somewhat knowledgeable |
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24% |
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Not very knowledgeable |
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6% |
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Not at all knowledgeable |
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1% |
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Not sure |
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Is your child planning to use student loans to pay |
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2013 |
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for their college education? * |
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50% |
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Yes |
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32% |
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No |
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18% |
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Not sure |
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Does your child plan to use federal student loans, |
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2013 |
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private loans or a combination of both? * |
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32% |
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Federal loans |
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4% |
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Private loans |
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54% |
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A combination of both |
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10% |
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Not sure |
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If your child had to rely on student loans or other |
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types of loans for college, how likely are you to help |
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2013 |
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2012 |
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them pay back the loans? |
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25% |
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22% |
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Very likely |
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33% |
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33% |
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Somewhat likely |
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25% |
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28% |
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Not very likely |
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13% |
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13% |
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Not at all likely |
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4% |
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4% |
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Not sure |
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Which do you consider the most reliable source of |
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2013 |
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2012 |
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information on paying for college? |
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47% |
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47% |
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Financial aid offices of colleges |
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13% |
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11% |
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Personal financial advisors |
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8% |
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6% |
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Friends and family |
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7% |
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6% |
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The internet |
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6% |
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7% |
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Guidance counselors in high school |
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3% |
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3% |
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Banks and other lenders |
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8% |
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8% |
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Some other source |
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9% |
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11% |
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Not sure |
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How much responsibility should your child have in |
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2013 |
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2012 |
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paying for their education? |
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13% |
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12% |
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All of it |
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29% |
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27% |
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Most of it |
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48% |
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48% |
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Some of it |
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7% |
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10% |
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None of it |
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3% |
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3% |
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Not sure |
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If you are taking out loans in your child’s name, |
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does your child understand how much debt they will |
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2013 |
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graduate with? * |
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40% |
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Fully understands |
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32% |
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Somewhat understands |
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15% |
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Doesn’t understand |
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13% |
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Not sure |
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Beyond tuition, how knowledgeable do you feel |
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2013 |
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2012 |
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aboutthe entire cost of a college education these days? |
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49% |
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48% |
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Very knowledgeable |
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39% |
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39% |
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Somewhat knowledgeable |
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9% |
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11% |
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Not very knowledgeable |
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3% |
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2% |
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Not at all knowledgeable |
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0% |
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1% |
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Not sure |
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Is earning potential after graduation more or less |
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2013 |
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2012 |
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important to your child’s education than his or her major? ** |
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42% |
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38% |
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More important |
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22% |
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21% |
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Less important |
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31% |
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32% |
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About as important |
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5% |
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10% |
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Not sure |
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Are you limiting your child’s college choices based |
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2013 |
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on price?* |
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49% |
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Yes |
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40% |
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No |
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11% |
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Not sure |
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Are you more likely to help fund your child’s |
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education if they major in a field that has a higher |
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2013 |
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likelihood of them landing a job? * |
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42% |
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Yes |
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44% |
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No |
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14% |
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Not sure |
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* not asked in 2012
** error due to transposed numbers; has been updated to be accurate
Source: Discover Financial Services
Discover Financial Services
Rob Weiss, 224-405-6304
robertweiss@discover.com