New Survey from College Ave Reveals How Families are Borrowing to Pay for College

With tuition bills due soon, survey finds less than one-third can cover the full cost of college with savings and income alone – families look at ways to increase income and cut college costs 

WILMINGTON, Del., July 10, 2024 /PRNewswire/ -- College tuition bills are due soon, and for many families with college-aged kids, they will likely need to look beyond savings to cover the total costs. Of those families helping to pay for their child's college education, less than one-third (28%) can cover the full cost of college with income and savings only, according to a recent College Ave spring survey of 1,000 parents of current college students.

Families plan to tackle the financial gap with a mix of methods, including student and parent loans. Overall, 45% of families plan to borrow –  this includes:

• Federal student loans (42%)
• Parent loans (19%)
• Private student loans (16%)

Of those borrowing federal or private student loans, families estimate they will borrow more than $46,000 over four years. For those using parent loans, the average is more than $68,000. The rule of thumb is to not borrow more than the student's expected first year's annual salary. According to the recent National Association of Colleges and Employers Salary Survey, the average salary for the class of 2024 is around $63,000 for those with an undergraduate business degree to more than $76,000 for those with a bachelor's degree in engineering.

However, beyond borrowing, families are also actively looking at ways to increase their income or save on college costs. More than half of families (56%) have emphasized the importance of graduating on time and within four years, according to the College Ave survey. Some students (10%) will live at home during college to help save on costs. Close to 1 out of 5 parents (17%) who are paying for college said they will take on a second job or side hustle, while 39% reported that their child will work to help contribute to costs.  

"Over and over again, our College Ave survey showcases that funding a college degree is a priority for families," said Angela Colatriano, Chief Marketing Officer, College Ave. "With so many resources available to pay for college – like scholarships, grants, income and savings, loans and more – it can feel overwhelming putting the pieces together. If you are exploring borrowing, College Ave offers tools, helpful resources and loan options that streamline this step of the process so parents and students can stress less."

For families who are considering student and parent loans to help cover the costs, Colatriano offers the following tips on borrowing:

• Borrow smart. Try not to borrow in total more than what your child expects to make in their first year's salary. By doing so, you are likely to be able to repay your student loans within 10 years.
• Know your monthly payments. 40% of respondents did not know what their student loan monthly repayment amount would be – make sure to keep track of any federal and private loans so you have a plan on how to repay. Check out the College Ave student loan calculator that can help you estimate your monthly payments, so you can create a budget and a plan.
• Figure out which repayment terms make sense for you. Among those who have student or parent loans, two-thirds (66%) opted for a lower monthly payment, according to the survey – but the other one-third (34%) wanted a shorter repayment term. Figure out what works best for your financial situation and future financial goals. College Ave offers some of the most flexible repayment options, providing families the ability to find a repayment plan that works for them.
• Know which party is responsible for repayment. Of those who will plan to take out loans, more than half of parents (58%) plan to help their child pay back their student loans. Make sure you have a discussion with your child on what you can contribute, what they're expected to contribute, and if you borrow, who is ultimately responsible to repay.
• Begin repaying now. Even as little as $25 a month can help reduce the total cost of the loan.
• Save when you can. At College Ave, when you set up a recurring automatic payment plan, you can receive an interest rate deduction on your loan.

The majority of families are on the paying-for-college journey more than once – 78% anticipate paying for college for 2 or more children. And for those who are borrowing during this journey, it's important to find a lender who offers good rates, flexible repayment terms and is a provider you can trust. For more information on how to plan and pay for college, visit collegeave.com.

About College Ave
College Ave started with a big vision and a simple mission - take the stress out of paying for college so students can focus on preparing for a bright future. Now a leading financial services company, College Ave remains committed to using best-in-class technology and deep industry expertise to deliver practical and personal solutions that give young adults a running start on their roads to financial success. We offer best-in-class products with competitive rates and a customer-friendly experience from start to finish. Visit: collegeave.com.

About the Survey
The College Ave survey was conducted by Barnes & Noble College Insights™. The national online survey of parents of undergraduate students who attend a 4-year college or university at one of the campuses served by Barnes & Noble College had 1,000 respondents and was fielded in March 2024. Last year, Barnes & Noble College Insights conducted more than 50 research studies and 100+ survey polls of students, faculty and parents that interact with one of its more than 770+ campus bookstores across the nation.

SOURCE College Ave