With the fall semester around the corner, families are figuring out how to tackle tuition bills and college expenses. And nearly 3 out of 4 (74%) are finding the cost of college surprisingly high, according to a recent College Ave Student Loans survey of parents of undergraduates conducted by Barnes & Noble College Insights™. The top three areas of unexpected higher costs were tuition and fees, room and board and a child’s personal expenses.
To help manage the financial gap, more than half of families (54%) plan to borrow. This includes:
- federal student loans (43%)
- private student loans (15%)
- parent loans (18%)
For some families, they plan to use a combination of the above loans. Finding solutions to finance college is important to families – nearly all (91%) parents of college-aged students strongly agree a college degree is important for their child’s future.
“Parents firmly believe that a college education is an important launch pad for their child’s future,” said Joe DePaulo, Co-Founder and CEO of College Ave Student Loans. “We designed the College Ave private student and parent loan experience to be fast, clear and easy so parents can stress less about the financing and focus on the bright future ahead.”
In addition to the cost of college, the survey found parents help fund their child’s personal expenses, too, including a phone plan (96%), auto insurance (75%), cost of travel (74%) and car purchase (44%). One-third of families (33%) also reported they give their child a monthly monetary stipend ranging from $101 to $250 each month. However, many families expect their child to also contribute to college costs; close to half (47%) expect their child to work while in college.
For families who are considering student and parent loans to help cover the costs, DePaulo offers the following tips to borrow smart:
- Plan for summer expenses. Families of freshman and sophomore students recalled spending close to $3,000 the summer before freshman year. This included electronics ($1,300 on average), dorm room essentials ($614 on average), travel and transporation ($507) and books and school supplies ($449). If you can and are willing to take on the debt yourself, parents can apply for a private parent loan from College Ave that deposits up to $2,500 in a parent savings or checking account to give you the flexibility to manage college expenses like these.
- Fill out the FAFSA. To access federal student loans, fill out the Free Application for Federal Student Aid (FAFSA). This form can also determine a student’s eligibility for federal grants, need-based financial aid, scholarships and merit-based aid, and work study, too.
- Borrow federal loans in the student’s name first. Federal student loans offer low fixed interest rates and unique repayment options, so they are always the best place to begin if you need to borrow. Just remember that there are annual and aggregate limits to how much a student can take on in federal loans, so they may not cover the full cost.
- Consider your credit. If you plan to cosign a private student loan for your child, it’s important to know that credit matters. Check your score and make adjustments as needed.
- Shop around. If you plan to take out a private loan, you’ll want to consider all your options. Look for good interest rates and flexible repayment terms. The College Ave Student Loans calculator can help you determine options to make your estimated monthly payment fit your budget.
- Make a plan to pay. More than half (57%) of families using federal and/or private student loans to fund their child’s education said they planned to help their child pay back their student loans. One tip: making payments against a loan while your child is still in school will help you save on the total cost of the loan.
- Save when you can. Oftentimes when you set up a recurring automatic payment plan, you can receive an interest rate deduction on your loan. If you enroll in auto-pay on a College Ave student loan, you’ll receive a 0.25% interest rate discount.