10 Strategies Parents Are Using to Pay for Their Kids' College
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The vast majority of parents plan on helping their child pay for college — but less than half know how they’ll cover the cost.
Findings in a new survey from student loan provider College Ave show that parents really do want to support their kids in getting college degrees. Among the 1,000 parents of current college students surveyed, 93% said they intend to pitch in to pay for college, and 75% said they’ve set aside some savings for that purpose.
Of the parents who have been stashing away money for college, the average amount saved is $45,000. That's laudable but probably not enough. It’s less than half the full price for one year of tuition, room and board and fees at the nation’s most expensive universities, where costs now top $90,000 annually.
That $45,000 also won’t cut it at schools where prices are more reasonable: According to the education nonprofit College Board, the total cost of attendance for the 2023-2024 school year averaged $28,840 at four-year public colleges for in-state students ($46,730 for out-of-state) and $60,420 at four-year nonprofit private colleges.
Understandably, many families haven’t nailed down how to handle these expenses. Just under half of the parents surveyed said they had a plan to cover the full cost of their kids’ college education. Equally unsurprising: 78% of parents said that paying for college is stressful, and 71% found the actual costs involved to be higher than they anticipated.
How parents are paying for college
Here are the most popular strategies parents say they’re using to pay for their kids' college:
- Income and savings (93%)
- Grants and scholarships (62%)
- 529 account (44%)
- Federal student loans (42%)
- Student contributions (36%)
- Parent loans (19%)
- Second job (17%)
- Private student loans (16%)
- Money from retirement account (10%)
- Credit cards (10%)
Bear in mind that all of the survey participants already have one or more children in college right now. Parents with younger kids aren’t included, which explains why the percentage of those using 529 plans, for example, might seem high. (Other research indicates that roughly 20% of parents overall have 529 savings plans, which offer tax-free growth and other benefits for investments so long as the money is used for qualifying expenses.)
If you’re wondering about the smartest strategies for covering the hefty costs of higher education, check out Money’s guide on how to pay for college.
It’s also critical to choose the right college to attend in the first place. Money’s annual Best Colleges list features schools that offer the best value for your dollar by factoring in financial aid, graduation rates, alumni salaries and more.
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