When it comes to college debt, post-recession graduates from the Classes of 2009, 2010 and 2011 have a lot to teach college-bound teens. According to a new survey by Fidelity Investments, while 66 percent of this year’s college graduating class believes the value of college is worth the cost, one-quarter say they would have prepared better to manage potential future debt.
This sentiment is even higher for graduates from the Classes of 2009 and 2010, with nearly 40 percent responding that they would have made different choices to lessen the amount of debt they accrued. This is not surprising as eight in 10 from this year’s college graduating class have an average college-related debt of nearly $40,000.
“Recent graduates are finding that tackling their college debt is one of the first critical lessons in managing their money,” Joe Ciccariello, vice president, Fidelity Investments College Planning, said in a statement. “While graduates value their college degrees, it is telling that their top financial advice to high school students about to enter college revolves around considering the costs and taking action to plan for them ahead of the college experience.”
Lesson one, says one-third of the Class of 2011, is start saving early. One-third reported having a dedicated college savings account, but 44 percent said they did not. Graduates who had saved in advance for college were able to cover 52 percent of their college costs. Those who had not saved from all of the classes surveyed had an average of $56,000 in debt.
Forty percent of all graduates who had saved for college reported that their families had worked with a financial advisor to help prepare for the cost. A testament to their planning, these families were three times as likely to have 529 College Savings Plans and carried 20 percent less debt than the average graduate (Fidelity is a leading provider of 529 college savings plans).
How else can high schoolers plan ahead to manage college costs. Survey respondents recommended working hard in high school to give you the best possible chance of securing grants and financial aid. They also recommended that families do their homework. There are many financial aid opportunities available to those who do the research and apply.
College grads also recommended getting a part-time job while in school to get a head start on paying down loans.