Many parents fear inflation's impact on college savings, survey says
Many parents are concerned about the impact that inflation will have on their ability to pay for their kids' college costs, a College Ave Student Loans survey said.
Almost two-thirds (61%) of families said they are concerned that their dollar won't stretch far enough to cover college expenses in the current economic environment. Additionally, the cost of college took 71% of families by surprise, according to the survey.
"The fall is an exciting time for many families as they begin the college admissions journey," Joe DePaulo, the co-founder and CEO of College Ave Student Loans, said. "Our survey highlights how much families value a college degree, as well as how much it could help and lessen financial surprises to have financial conversations as families begin to make their college lists."
Families looking for help to cover the cost of college could consider private student loans. You can visit Credible to find your personalized interest rates and see if this option is right for you.
Household debt surpasses $16.5T in Q3 amid inflation, rising demand: NY Fed report
Inflation's impact on tuition costs
In November, inflation rose to 7.1%, the lowest level of 2022, after hitting a record high of 9.1% in June.
The Federal Reserve has raised rates several times this year to control inflation and bring it down to its 2% target. The last increase, delivered in December, brought the federal funds rate to a targeted range of 4.25% to 4.5%, the highest level in 15 years.
Most parents believe that inflation has increased college costs, a June survey from Morning Consult said. In fact, 61% of adults said they think universities and colleges are increasing tuition fees at a higher rate than current inflation. However, tuition at most universities and colleges has increased at "up to roughly half" the rate of inflation, the survey said.
"Such concern over the cost of education, even with its relatively lower growth rate, suggests that millions of Americans remain sensitive to spending in categories such as higher education," Morning Consult said.
If you're using student loans to pay for college but federal funding doesn't cover everything you need, you could consider taking out a private student loan. You can visit Credible to compare multiple private lenders at once and choose the one with the best interest rate for you.
Advocacy groups call for student loan payment pause extension as forgiveness plan grinds to a halt
How parents can prepare for college costs
The best defense against inflation concerns is to know what to expect, according to the College Ave Student Loans survey.
Families should also prioritize how they plan to finance their child's college education as part of the conversation when applying to schools, the survey said. Parents of current college students offered the following advice for parents of college-bound children:
Apply for more scholarships
Most parents (79%) said scholarships were essential to financing college. But 53% also said they had difficulty finding college scholarships for their children.
"They encourage their peers to take the time to reach out to local organizations or their child's high school guidance counselor for support," the survey said.
Apply for federal aid
Seventy-two percent of parents said that filling out the Free Application for Federal Student Aid (FAFSA) is another essential step to financing college.
Thirty percent of respondents said FAFSA grants and scholarships were part of their child's financial aid package, something they likely would not have received had they not filled out the form.
Colleges and universities use the FAFSA application to determine need-based aid; some aid is handed out on a first-come, first-serve basis. Yet many families are unaware that the FAFSA form for the 2023-2024 academic year became available on Oct. 1, according to a recent Sallie Mae and Ipsos survey. And only 54% of families know that all can apply for aid through FAFSA.
If you are looking to borrow money for college after you complete your FAFSA application, you could consider taking out a private student loan to cover the cost. You can visit Credible to compare multiple student loan lenders at once and choose the one with the best interest rate for you.
Education department updates PSLF program – here's what changed
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.