Parents less worried about paying for education, some still rely on student loans, survey finds
The pandemic has cast a shadow over the finances of many American families, and the rising cost of a college education remains a barrier for young adults wishing to pursue higher education. But despite the challenges, parents are more confident about funding a college education for their children in 2021, according to a recent survey.
Fewer families are feeling overwhelmed by the cost of a college education this year compared to last year – 55% in 2021 versus 71% in 2020, according to the survey of 1,045 parents conducted by College Ave Student Loans and Barnes & Noble College Insights.
“The results of this survey prove just how determined students and their families are to achieve this college degree, regardless of the unforeseeable circumstances of the past year.”
Parents use a number of ways to fund their children’s college education, from savings accounts to student loans. If you are considering taking out a private student loan for your student, you can pre-qualify on Credible to see estimated rates and terms without affecting your credit score.
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1 in 4 parents will borrow student loans to help pay for their education
The first step in funding a college education usually begins with submitting the FAFSA form to determine if your student is eligible for financial aid. After that, about a third (34%) of parents will cover the costs by dipping into their savings, while 16% will use investment assets and 10% plan to appeal their financial aid award letter. Almost a quarter (24%) said they would borrow student loans on behalf of their children.
The good news is that private student loan interest rates remain at record levels. 10-year fixed-rate loan rates averaged 3.50% among borrowers with a credit score of 720 or higher who selected a lender in Credible’s online loan market during the week of June 14, 2021.
Make sure you’re getting the lowest possible rate on a private student loan for your child by shopping around with several lenders in an online marketplace like Credible.
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Many parents surprised by tuition, room and board fees
Many parents felt “shocked” by the cost of college education, according to the survey. But they were less surprised in 2021 than in 2020.
While it is commonly believed that college is expensive, this suggests that it is more expensive than parents anticipated.
Between FAFSA forms and scholarship and grant applications, you may still not be getting the money you need to fund your child’s education. In this case, you may want to consider borrowing student loans. You can use Credible’s student loan repayment calculator to estimate your monthly payments.
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How to know which type of student loan is right for your child
Student loans fall into two categories: federal and private. Federal student loans come with protections such as income-tested repayment plans, loan forgiveness, and forbearance. However, federal loans may not completely cover the cost of a college education.
If you still need to borrow more money to pay for your education, consider private student loans. This is a good time to borrow because the interest rates are low and you can search for the lowest possible rate on private loans using an online marketplace like Credible.
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