When Families Need More Than Just Savings to Cover College Costs: Survey Reveals How Parents Manage the Gap

College Ave Student Loans survey finds that while half of families feel comfortable with the amount they've saved for college, several expenses were more than anticipated

WILMINGTON, Del., June 22, 2022 /PRNewswire/ -- With college tuition bills coming, many families are strategizing the best ways to pay for their child's upcoming school year. If you are like the majority of families (79%) in a recent College Ave Student Loans survey of 1,010 parents of college-aged students conducted by Barnes & Noble College Insights™, you have some savings set aside. And for a small portion of families (17%), the savings is estimated to be enough to cover the full cost to obtain a higher education degree.

However, for the majority of parents who are not paying for college solely through savings, they are using a variety of funding methods to cover the costs, according to the survey. The most common financial resources they are using:

When Families Need More Than Just Savings:
How Parents are Paying for College

Less common means for paying for school include working a side hustle (13%), borrowing from a retirement account (9%), credit cards (7%) and taking out home equity loans or second mortgages (7%).

"Right now, families with college tuition bills on the horizon are working together to strategize the best ways to cover the upcoming year, or even the next four years, of education costs," said Joe DePaulo, Co-Founder and CEO of College Ave Student Loans. "Our survey highlights that there is not a 'one size fits all' approach to paying for college and that weighing all the options – including scholarships, income, savings and borrowing if need be – is a decision unique to each family."

Of those families who had saved for college, half felt comfortable with the amount they had saved. However, some college costs can take families by surprise, spreading the savings thin. College tuition and fees were more than nearly 3 out of 4 (72%) parents had anticipated, followed by room and board (67%), child's personal expenses (41%), school and activities fees (40%) and books and supplies (39%).

To help manage upcoming tuition bills and lessen the surprise of unexpected costs, DePaulo shares the following tips:

• Make a plan. If you are part of the majority of parents (59%) who either didn't have a budget or whose child selected a school outside of their budget, now is the time to make a plan on how you will approach the upcoming bills, fees and costs. Make sure you look into all of the resources available to you. For some families, they reported taking a step back from investing and instead are prioritizing paying for college (42%).
• Fill out the FAFSA: The Free Application for Federal Student Aid (FAFSA) can determine a student's eligibility for federal grants, need-based financial aid, scholarships and merit-based aid, work study and federal student loans, so make sure to fill it out if you haven't already. The FAFSA is also used to access state and school aid in some cases.
• Apply for grants and scholarships: Encourage your child to apply for as many grants and scholarships as every little bit can help. One easy one to consider is the $1,000 scholarship monthly sweepstakes from College Ave.
• Don't sacrifice your retirement: 43% of families are stressed about balancing their retirement and paying for college and more than half (52%) are willing to defer their retirement to pay for their child's education. Look at your personal financial goals, and if need be, speak to a financial planner to see how you can best prioritize and accomplish them.
• Ask your child to pitch in: 37% of parents said their child is or will work part-time while in school. Of the parents who said their child is working while in school, 54% said their child does or will mostly fund discretionary expenses while they attend college. Encourage your child to invest in themselves and their future.
• Borrow smart: A rule of thumb – your child should not borrow in total more than they expect to earn their first year out of college. By doing so, it ensures the child can likely pay off their loans within 10 years. With borrowing, always borrow federal loans in the student's name first as these come with unique benefits and protections not always offered by private lenders. If those don't cover all your costs, consider a private student loan to close the gap. A great place to start is College Ave Student Loans calculator which allows you to compare interest rates and repayment terms to give you an idea of the monthly payment and total cost of the loan.

For more tips and resources on how to plan and pay for college, visit: https://www.collegeavestudentloans.com.

About College Ave Student Loans
College Ave Student Loans 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 fintech lending 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: www.collegeavestudentloans.com

About the Survey
The College Ave Student Loans 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 1,010 respondents and was fielded in May 2022. 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 Student Loans