Parents make countless sacrifices for their children. Now, the college is more expensive than ever before, and they are jeopardizing their financial future to secure their children.
exist Poll Respondents said that among the 1,000 parents at Citizen Bank on Tuesday, they were working in a second job (19%), lending them 401(k) or liquidating personal funds (30%), suspending investments entirely (26%), and reducing major purchases or holidays (66%). More than 60% of parents report that they want to postpone their retirement to pay for their children’s college education.
University costs surge: 40 times as much as 1963 Educational Data Program. Education Data Initiative says tuition fees for four-year public universities jumped more than 36% between 2010 and 2023 alone $40,000 per year.
This results in more than 60% of parents needing to “beyond” typical financing options, such as 529 plans and federal loans, according to Citizen Survey data.
“The pressure has increased due to increased tuition fees, inflation and future uncertainty over future costs,” said the report. Tony DurkanVice President and Head of Savings at 529 University loyalty,Tell wealth. “Many families are still underprepared and usually rely on rough estimates rather than clear savings goals.”
“Very adventurous”
Pam Krueger, Investment Advisor and Founder WealthrampIt is said that parents attend peer shows, retire and refinance their homes to pay for college.
“This comes from a place of love and a desire to protect children from student debt, but it’s also risky,” Kruger warned. “These choices can make parents recover in ways that are difficult to recover from.”
According to citizens, part of the problem is the disconnect between college admissions and financial plans. Survey data shows that one in five parents admit that they are just focusing on getting their kids to college without thinking about how to pay. It’s an annoying and embarrassing topic for parents, with nearly 50% of investigators saying they would rather talk to their children about drugs and alcohol.
How to prepare for college
Retirement, work in another job or Refinance your home Financial advisors say there are other options.
certainly, 529 Savings Plan Can help – but there are longer runways. These tax-free programs can sometimes get you to pay tuition in advance, but many people have provided these accounts with funding for many years.
Still, “the sooner you start saving, the more time your money has to grow through compounding,” Durkan said. “Even a small amount of regular contribution can increase significantly over time.” Additionally, any unused funds can be transferred to siblings, cousins, or back to themselves, which means there is no wasted money and it stays in the family.
However, if it’s too late in the process – for example, if your child is already in high school, you need alternative strategies. It requires open and honest communication with your kids to understand what you can actually afford, Kruger said.
“Sit down with your kids and talk openly about the reality. Explore schools that are generous in aid or have transparent pricing,” Kruger said. “Look at the full cost – not just tuition, but rooms and boards, books, travel. Sometimes ‘big-name’ schools aren’t the best financial situation – it’s OK.”
For parents who first started to go to college when their children were in high school, Brian SafdariFounder and CEO University Program ExpertIt is also recommended to browse investments and assets as early as 9th or 10th grade and apply for grants, scholarships, performance-based aid and institutional aid. Even private universities The stickers are priced at $95,000 per year He told him that the generous aid would make the end cost the same as the public schools, or even less. wealth.
However, “the expected cost minus saving minus free money may still leave a gap,” Safdari said. “Once we have that number, we can start figuring out how to fund it within four years while minimizing student debt and leaving enough money to retire.”
