College-Bound Teens Face Budget Squeeze; Many Alter Education Plans
New Junior Achievement-Allstate survey finds nearly two-thirds of teens changing college plans due to the economy.
COLORADO SPRINGS, Colo., April 13 /PRNewswire/ -- As incoming college freshmen prepare to turn in their acceptance letters on May 1, many families are scrambling to figure out how to fund their teens' education. Nearly two-thirds (63 percent) of teens surveyed indicated they had changed their college plans because of the economy, up from 55 percent last year. This is among the key findings of the 2010 Junior Achievement/Allstate Foundation "Teens and Personal Finance" Survey, now in its eleventh year of gauging teen attitudes and behaviors in money matters.
Included within the 63 percent whose college plans have changed, 41 percent are working more to pay for college, 37 percent are staying closer to home or are not attending college out of state, 21 percent plan on going to a community college and 15 percent may delay school for one year or longer.
Economic pressures and steadily increasing tuition are forcing teens and their families to exercise financial discipline to pay college costs. An overwhelming majority of teens—90 percent—report they and their families are saving for college, with 53 percent of those teens saving their own money and 83 percent reporting their parents are saving for their college educations. However, a quarter (25 percent) hasn't determined how they will pay for college.
Interestingly, 86 percent of teens say they plan on getting college scholarships. Yet, only 66 percent of all undergraduates received some type of financial aid in 2007–08, including grants, loans and scholarships, according to the U.S. Department of Education (the most recent year for which information is available). Those who miss out on financial aid opportunities will be left with tough financial decisions to make.
Of those students who do receive some type of financial aid, U.S. Department of Education data show that the median amount of student-loan debt carried by 2007-08 bachelor's degree recipients at public four-year colleges was $17,700 and $22,375 at private four-year institutions.
This debt level has taken its toll on students' ability to repay their loans, as evidenced in the rise of student-loan default rates. The latest data from the U.S. Department of Education show that default rates are up from 5.2 percent in 2006 to 6.7 percent in 2007.
Considering that nearly seven percent of college graduates default on their student loans, it is imperative that teens weigh their ability to service their student loans when making college and career choices—equally important are solid financial planning and disciplined money management.
Jack Kosakowski, president of Junior Achievement USA, noted, "Selecting a college and weighing whether to take on student-loan debt are not solely education-related decisions; they are also major financial decisions. We don't want our newly minted college graduates defaulting on their student loans which can affect their credit rating for years, or struggling to service those loans. Junior Achievement aims to provide students with a strong set of money-management skills, so they can effectively budget, use credit, invest and save. Since April is Financial Literacy Month, it is a great time to reinforce the importance of those skills."
Junior Achievement and The Allstate Foundation have partnered to create Junior Achievement, $ave USA, a financial literacy initiative comprised of free, downloadable money management exercises for parents and their children to do together—and free, downloadable classroom lessons for students at the elementary, middle, and high school levels.
For an executive summary of the survey results, click here.
This report presents the findings of a telephone survey conducted among a national sample of 1,000 teens comprising 500 males and 500 females 12 to 17 years of age, living in private households in the continental United States. Interviewing for this TEEN CARAVAN® Survey was completed during the period February 11- 15, 2010. The survey's margin of error is +/- 3.2 percent.
About Junior Achievement® (JA)
Junior Achievement is the world's largest organization dedicated to inspiring and preparing young people to succeed in a global economy. Through a dedicated volunteer network, Junior Achievement provides in-school and after-school programs for students which focus on three key content areas: work readiness, entrepreneurship, and financial literacy. Today, 128 individual area operations reach more than four million students in the United States, with an additional 5.7 million students served by operations in 122 other countries worldwide. For more information, visit www.ja.org.
The Allstate Foundation
Established in 1952, The Allstate Foundation is an independent, charitable organization made possible by subsidiaries of The Allstate Corporation. The Allstate Foundation partners with non-profit organizations on community initiatives that promote "safe and vital communities," "tolerance, inclusion, and diversity" and "economic empowerment." Teen driving and empowering victims of domestic violence have been major initiatives for the Foundation since 2005. For more information visit www.ProtectTeenDrivers.com or www.clicktoempower.com.
SOURCE Junior Achievement
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