College Costs Worry Younger Parents

College costs pose a significant financial concern for younger parents, according to an April survey by Millionaire Corner, but the worry subsides among parents in their 40s and 50s who are likely to be paying for college.

Nearly half – 49 percent - of investors age 40 and younger say they have “major financial concerns” about the educational expenses of a child – a concern shared by about 38 percent of investors in their 40s and 29 percent of investors in their 50s, according to a poll of more than 990 investors from a range of ages and wealth levels.

Concerns about college costs appear to taper as parents grow older and begin paying tuition and other bills, according to our research. More than 56 percent of parents in their 40s are helping a child through college, and about 3 percent are helping a grandchild. More than 40 percent of parents in their 50s are helping a child, and about 8 percent are helping a grandchild.  In contrast, 36 percent of parents age 40 and younger are currently contributing financially to the education of a child and about 4 percent are paying educational expenses for a grandchild.

Close to half of the older parents – 47 percent of investors in their 40s and about 46 percent of investors in their 50s - are paying 100 percent of these college costs. On average, investors in their 40s and 50s pay 70 percent of college costs.  Investors in their 40s are also contributing an average of 20 percent of the college costs of a grandchild, while investors in their 50s are paying an average of 26 percent.

The vast majority of families surveyed – more than 75 percent of investors age 40 and younger and more than 80 percent of investors in their 40s and 50s – say they have planned for a long time to pay for the educational expenses of their children. About one-third of investors in their 40s and 40 percent of investors in their 50s have had to cut back on other spending to pay for their children’s college expenses.

Americans now hold more than $1 trillion in student loan debt - a record sum that threatens to block the upward mobility of young Americans, according to a new report by the policy and advocacy group Demos. Today, two-thirds of students in the United States graduate with student debt and the average loan balance is nearly $25,000, according to Demos.  

“Debt is not financial aid – It allows students to pay for college but also raises the cost of a degree because all student loans, especially private loans, include interest charges and origination fees,” said Demos in a statement protesting what it calls the “debt-for-diploma” system for financing college costs.