High School Students Unprepared for Rising Costs of College With Deep Divide Between Funding Plans and Actions, Says College Savings Foundation's Survey of American Youth

WASHINGTON, Feb. 22, 2012 /PRNewswire/ -- A new survey of 16- and 17- year olds reveals a widening gap between high school students' plans for funding college and their ability to do so.  Despite the fact that an overwhelming majority of students – 78 percent – said it was their responsibility to pay for at least part of their college education, both the data and the commentary of respondents to the College Savings Foundation's third annual How Youth Plan to Fund College survey show that students are worried and confused about how to accomplish this.

"This is a clarion call for financial literacy," said Roger Michaud, CSF Chairman. "We need to better prepare both parents and their children with the skills and strategies to cope with the costs of college."

One disconnect arose around savings: While 74 percent of students have decided that they want to save for post-secondary education, only 45 percent have actually begun to save.  Even among the savers, fewer are giving up electronics or cars than have in the past, and fewer still know how much they should be saving in the first place.  

Another potential blind spot came up in college choices.  While the vast majority (78 percent) of students said that costs would influence their higher education plans, more planned to go to private schools this year than last (21 percent versus 16 percent in 2011) and fewer to often more affordable public schools, (45 percent, down from 51 percent). 

At a time when college costs and the debt to pay for it are escalating far beyond inflation – and outstanding student debt is topping $1 trillion – the survey asked students what they think about the impact of college costs on their education plans, the specter of college debt, the prospects of their parents helping them and their hopes for financial aid and scholarships.  

One good news finding is that more parents are saving for their children's college: 45 percent versus 39 percent last year, of which 31 percent are using tax-advantaged 529 college savings plans. 

Yet students are still turning to loans to fill in the gaps:  63 percent expect to borrow to pay for college, with three quarters of those students expecting to cover more than 25 percent of college costs with debt; and almost all students borrowing are concerned about the debt burden they could face when they graduate. Despite this concern, only 25 percent of students borrowing have projected the total loan amount they will need to graduate – down from 30 percent last year, and only 20 percent have projected what they'll owe each month to pay the debt, down from 22 percent in 2011. 

As in past years, significant numbers of students are expecting financial aid (80 percent) and merit scholarships (70 percent) to assist in paying for college/post-secondary school.  These expectations do not fit with the reality that only 10.6 percent of full time students at four-year schools received non-athletic scholarships in 2007-2008, and the average amount of assistance was $2,815, according to the National Postsecondary Student Aid Study (NPSAS, sourced at FinAid.org).

While more students are talking to their parents about their involvement in funding their college education, 70 percent up from 63 percent last year, commentary from the students suggest that these conversations have mixed results:

"My parents have been unemployed and it is very difficult for them to help us with college expenses, yet alone make house and bill payments. They have told me it is up to me to pay for my college tuition."

"College costs have gone up way too much. It costs more to go the college then buying a really nice car and almost as much as buying a home. In some cases more than buying a home."

"Father went through a plant closure in 2006, an additional job change in 2008, a lay-off in 2009, and didn't land a decent job until September 2010. Five years of a lousy manufacturing sector eroded what savings we accumulated."

To meet these challenges, students are eager to learn how to deal with college costs: 51 percent wished that their current high school offered financial literacy instruction for them and their families to prepare for college costs; and 52 percent have researched tuition costs for specific colleges or post-secondary schools, up from 49 percent last year.  Thirty five percent have researched ways to save including personal savings and 529 college savings plans.

"Funding college is an enormous challenge, and to their credit, these high school students want to get a better understanding of how to tackle it," said Michaud. 

Detailed survey findings and graphs: www.collegesavingsfoundation.org.

SOURCE College Savings Foundation