How Much Do Other Parents Help Pay For College Tuition?

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As the school year ends, I am reminded that my children are another year closer to college. I still remember paying off my own $30,000 in student loan debt, and now I am worried about saving up for their tuition. While I still maintain that parents should secure their own retirement needs before worrying about their kid’s college bill, what if you are doing okay and want to help out?

Priceonomics and student loan marketplace LendEDU did a survey of over 1,400 college graduates between the ages of 25 and 54. They found on average, people graduated college initially with roughly $40,000 in student loan debt and currently still maintain a balance of roughly $30,000.

Of these college graduates, how many people receive financial help from their parents? How much assistance did they get? Here are the results.

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The survey also asked questions about gender, race, and the extent to which debt hindered their ability to cover daily expenses, save for retirement, or start a small business. The article focused on the differences, but overall I saw more similarities than differences. In all the cases, between 50% and 71% of people felt that their student loan debt hindered them in all three scenarios.

There are many (terrifying) projections about how much college will cost in 2035. I’ve seen numbers over $100,000 per year for private tuition/housing and $50,000 per year for public tuition/housing in today’s dollars. However, according to this survey only 9% of parents paid for most and 11% paid for half of their kid’s tuition. 80% of parents either paid nothing or “a little”. It’s hard to reconcile these two stats. Are students in 2035 really going to graduate with $100,000 of debt? Something is going to have to give.

Comments

  1. Jon, are you saying that you are not going to save for your kid’s education? Or, have you been saving? I’m a little younger than you and have a 1 year old . I have been socking money away in an IRA (instead of a 529) for a year, but nothing more. I am trying to secure my retirement first. It may be a while before I can contribute anything more to a college fund (unless i work for an employer that offers free tuition).

    • I am going to save something for my children’s education, and have started 529 contributions, but I am not sure how much. For one, my parents did help pay for my college and my wife hers, so we want to pay it forward. I also feel that I should save something because I am guessing that if the FAFSA takes into account assets, the kids will not be eligible for much financial aid even if my annual income isn’t very high. All of my “aid” in college was loans anyway, so if I can I would like to avoid them having a huge $100,000 loan balance upon graduation. I just worry about the entire system as most people won’t have that.

      • I read on bogleheads forum that some folks are recommending to put college money into a Roth IRA. I think the main points were the flexibility of the IRA and the fact that it’s not counted as part of your financial record when applying for FAFSA. Then, if the kid(s) decide to join the military, trade school, etc you will have no issues using the money for something else. 3

  2. Joe Wilson says:

    The whole college system will implode on itself before we go to $100k a year. I think over the next 15-20 years college will become different than what we have seen the past 50 years and that’s kind of sad because I really enjoyed my college years.

  3. Tuition is probably going to continue to rise and be eye-popping in 15-20 years from now. But very few students pay full tuition at the most expensive schools. There is a lot of financial aid available. If your children get the opportunity to attend one of the best, most expensive private schools, they will likely get a fair amount of financial aid unless you have a very high income. If you have a very high income, you should be saving for their education. The people who earn a lot and spend a lot and don’t save will be the ones forced to make difficult decisions, and I don’t think most of the people who read this blog fit into that category.

  4. I was lucky enough to be eligible for student aid and did not have to take out any loans my entire college career. I do not envy having to be in that position of starting to pay off thousands of loan debt out of college. It is unfortunate the level at which you must be financially in order to receive aid. My niece is taking out loans and my sister is the only bread winner and does not make much..but according to the government she does…

  5. Meh.

    Any study/survey that focuses “average” student loan debt is looking at the wrong target.

    Average is misleading. MEDIAN is where the conversation needs to live. Because as we learned in fourth grade, median is usually a far more accurate indicator than average.

    And, stories/studies like this always fail to point out those who complete a degree with no debt incurred.

    This is old – from 2013 – but item three in this WashPost story illustrates this point well:

    https://www.washingtonpost.com/news/innovations/wp/2013/09/24/five-myths-about-college-debt/?utm_term=.3bd24b77b18e

    Sorry for the side-tangent, but even in the 2010s, a significant percentage of students graduate with no debt and for those with debt, the MEDIAN debt is always lower than the average debt that the media gasps about.

    I still believe students should be able to pursue a degree without incurring debt, but that is an entirely different discussion.

    And to the point of your column, Jonathan, there certainly has been an uptick in college and university materials pushing the “family contribution” to a student’s education in the past decade. A far different world that when I completed my first degree in the ’80s.

    • ” MEDIAN is where the conversation needs to live”

      The median student loan debt at my alma mater is $0.

      Of course thats just an anecdote but it is along your point.

  6. The survey doesn’t address how students actually paid for college. Most students get financial aid. I’m assuming most of the families where parents paid little or nothing were getting financial aid.

  7. Jennifer says:

    Tuition will keep rising to subsidize and ever-increasing percentage of kids who cannot afford to pay it. The percentage of people who actually can afford the tuition (due to high income and/or saving) will decrease, and they will have to subsidize everybody else. So, I disagree with your statement that “something has to give.” In Washington state, tuition from public schools is used not only to subsidize students who can’t afford to pay at public schools – not just the same public school, but all public schools – but also to subsidize students attending private school. It’s nuts, in my opinion.

    My husband and I are both engineers, and I don’t anticipate getting any aid whatsoever. (My Dad was an engineer, and we got no financial aid when I went to school – leading me to choose the college that offered me the largest merit gift.) Therefore, we’re saving up and plan to have enough saved to at least fully cover public college before our kids reach that age. On the plus side, WA state has GET (you can pay for tuition in today’s dollars). On the minus side, WA’s colleges just aren’t really that great. They’re sort of middling.

    • What do you mean that WA state is using public school tuition to fund private school?

      Not sure what you’re talking about “middling” colleges in WA. WA has some good universities. OR has middling… ID has middling… WA isn’t like CA but who is?

  8. Ken in GA says:

    I feel that I am lucky that I was in college during a time (early 80’s) that between summer and part time jobs and some help from my parents that I was able to pay my way without going into debt. In fact it may be hard to believe, but I paid the majority of the costs myself (although my parents have convinced themselves otherwise!) This encompassed two initial years at a local community college, two more years away from home at a state university, and then a year+ in graduate school.

    Although a lot of factors have contributed to the sky rocketing cost of a college education since then, one observation I would make about the states I’ve lived in (Florida and Georgia) is that state governments have made a very dubious “deal with the devil” in implementing lotteries that would supposedly bring in boatloads of money for higher education. Yes, it has brought in some money — to which the state legislatures have responded by reducing taxpayer-funded allocations that used to be directed toward higher education. This was further magnified by a couple of market downturns and recessions in which state budgets were cut even more. Consequently many states now face a situation in which lottery proceeds are not coming close to meeting the promise for education funding by which they were sold to the public, combined with what appears to be permanent cuts in state funding. Thus, the only option becomes to raise tuition.

  9. If tuition really hit the 100k a year mark, there is no way the number of attendees can stay the same.

    In 4 years, that’s the same as a mortgage. Coming from the no help section, if college had been 400k I would mostly like found another way towards sustainable income.

    Thanks for sharing, this will really help keep saving for my future little ones in perspective !

  10. When I was attending UC system my understanding was that the cost was going up due to a drop in state and federal funding, not because the cost of education was going up. This makes me believe the pace of increase will not continue at current rate and price of education will stabilize.

    • Correct. Most of the tuition increases (above inflation) are explained due to cuts in state and federal funding. You can’t cut those below $0. At the same time they kept up financial aid for people who have low income and that made the retail sticker price tuition inflate further.

  11. This only accounts for students who graduate with debt. What about parents who save well so kids don’t take on debt? Aren’t they helping a lot?

  12. We paid for our son’s tuition and he came up with a great solution combining Community College and State University educations. His first 2 years were at a Community College, then 1.75 years at a major state university after he worked for a year in that state to get in-state tuition. Then final semester at a Community College….all allowing him to graduate from the major State University. Our cost over 5.5 calendar years was $90K including room & board. He also received $4000 in financial aid. No loans.

    My bigger picture concern for us and our daughter, who’s going to college in 4.5 years, is our increasing healthcare costs AND have heard from some of my college buddies that in the next 3 to 5 years major companies are significantly cutting jobs due to pure automation. AT&T being one example. There is a disconnect between college tuition pricing and trending realities.

  13. We also combined community college with the university. We did pay the bulk of the tuition, fees and got him used car but he worked part time also. Our son graduated debt free, about $40K. Daughter stayed at home and did same thing. Two kids about $80-90K. Note: we did not pay for any weddings and they were told in advance.

  14. Benjamin S. Yost says:

    I’m a college professor with an interest in the economics of higher education (though I’m a philosopher). The costs of college are skyrocketing in part because of a huge increase in administrators. You wouldn’t believe how many deans, assistant vice-presidents, and whatnot there are at the average university, all of whom boast salaries professors can only dream of. And unfortunately, these multiple layers of administration do not, in my view, add much to the educational experience. In many places (less in my institution than others), they spend their time making up busy work to justify their existence. Another factor is facilities. It’s easy for a university to borrow money to erect a new lab, dorm, etc., and as a result, there is an arms race to build the most lavish facilities possible. The reasoning is that amenities attract students. But of course with borrowing comes interest payments… And if you’re talking about public schools, their revenue from the state has plummeted.

    • James N says:

      Those are the same cost drivers that I’d gathered were the case, but it’s nice to hear the same perspective from the inside!

      I’m with others in the camp that believes that actual tuition can’t possibly continue to increase at current rates for much longer. Lenders have limits to the amount they’ll provide in student loans, for one thing. And eventually there has to be an amount where it becomes clear even to an 18-year-old/inexperienced parents that it is not worthwhile.

      I believe there’s going to be a major transition to competing more based on cost, in the not-too-distant future. The Community Colleges may play an interesting role in driving this movement. It is also not unlikely that a paradigm shift will occur, into more tech-based learning where physical presence and classes taught on a regular schedule by lecturers standing in front of a group grow less common.

  15. Neat article. I’m eternally grateful to my parents for helping me pay for college. I actually had no idea that most parents don’t help pay at all. That’s shocking.

    I go to Kent State University, where they just built a new architecture building that, admittedly, looks cool as hell. When they laid out the floor plan, it looked like it would take 5-10 years. Next thing I knew, it was up in the blink of an eye.

    They expedited a whole building for God-knows-why.

    I don’t know a single student who wouldn’t rather pay two grand less a semester and sit on fold-out chairs in someone’s basement. According to a recent survey that was published on Forbes, 49% of grads think they would have achieved just as much had they not gone to college, but now they’re saddled with over $37k in student loan debt. It’s an absolute shame. It’s getting to the point where it doesn’t matter what job you get when you’re out of college; you’re going to be poor.

    I actually have a horror story about the greed of KSU at my site, if you’re interested. It should be the second post down.

  16. In regard to your comment about how much college will cost in 2035, I don’t think it will be that expensive. At some point the cost will exceed the value provided from the education, at which point people will stop attending and the costs will go down. When at what price point, that I do not know,

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