A new survey from T. Rowe Price reveals parents in the US are less willing than they have been in the past to take on massive debt toward their children’s education. Here’s a closer look at the findings.
Taking on Less Debt…
According to the global asset management firm’s tenth annual Parents, Kids & Money Survey, just 14 percent of parents said 'yes' to the possibility of taking out more than $75,000 in college debt on behalf of their children in 2018. This number dropped from 26 percent and 28 percent in 2017 and 2016, respectively.
At the same time, parents are also adjusting their attitudes about how to manage the cost of college. For starters, many are now considering sending their children to less expensive schools to minimize debt. They are also saving more through 529 college savings accounts compared to regular savings accounts, which were more popular in previous years.
….And Less Stress About Debt
The survey also revealed that in resolving to take out less college debt, parents are feeling less anxious over college costs. Specifically, while 31 and 42 percent of parents said they lost sleep worrying over paying for college in 2017 and 2016, respectively, just 27 percent say they have the same trouble now.
Financial planner Stuart Ritter said, “This September we have a real reason to celebrate College Savings Month: More parents are doing the right thing to financially prepare for college costs [...]. A stronger aversion to student debt, increased usage of 529 college savings accounts, and a decrease in parents pulling money from college savings for other expenses are very positive developments.”
But experts also say it’s too soon to conclude whether this trend is a permanent one.
"It's hard to say whether the 2018 findings are an anomaly or whether this may represent a shift in parents' thinking about college costs. For years, we frequently saw a mentality among parents of 'the best school at any cost'. With so many negative headlines about the burden of student debt, we may have reached a tipping point. We will look to the 2019 findings to determine if this is a new trend with staying power,” concludes Ritter.
For ways to save money on college, read here.
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