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Many parents saving for college aren’t ready to pay first-year tuition: survey

A recent survey found that parents are saving for college, but the costs often exceed budget. (iStock)

More and more parents are saving for college, but a recent survey found that fewer than half are ready to pay the first tuition fee by the time their child graduates from high school.

Of those parents who saved for college, three in four had saved an average of $45,000, College Avenue reports. investigationOf the 75% who have already set aside savings, 28% plan to pay for their child’s entire education, but just under half of all parents (49%) had made plans to pay for the full cost of college before their child even enrolled.

the Latest AnalysisThe College Entrance Examination Board estimated that the average advertising cost for admissions at private, nonprofit colleges last year was $60,420, compared with about $28,840 for students at in-state public universities and $46,730 for students at out-of-state public universities.

The survey found that the cost of attending college is surprisingly higher than parents who are saving for their child’s education expect. About 71% of respondents said the costs exceeded their budget, and two in three parents said the cost of room and board, college tuition and fees were higher than expected. Four in 10 parents cited their child’s expenses at school as an unexpected expense.

“Year after year, College Avenue research shows that parents strongly believe that a college degree is essential to their child’s future,” said Angela Colatoriano, chief marketing officer at College Avenue. “Our research highlights how families are completing the investment puzzle, from savings and earnings to scholarships and borrowing. Parents are passionate about helping their children achieve their next big goal in life: a college education.”

If you’re currently in school or will soon be enrolled and need more financial aid than you can get on the Free Application for Federal Student Aid (FAFSA), consider taking out a private student loan. To find private interest rates that won’t affect your credit score, visit Credible.

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FAFSA Delays Hurt College Payment Planning

The survey found that 75% of parents said they are saving for college, but the vast majority (93%) plan to use a combination of methods to pay for their children’s higher education: 62% plan to use grants or scholarships, and 42% plan to use federal student loans.

Federal student loans, grants, and need-based scholarships rely on information provided on the Free Application for Federal Student Aid (FAFSA) form. Yet, a major revision to this form is affecting the amount of student aid some students will receive for the upcoming fall semester. Additionally, 47% of first-generation students failed to complete the FAFSA, meaning these students who are perhaps most in need of aid will not receive any aid at all. Study.com report found.

The delays also mean that colleges are months later than expected in distributing scholarship packages to students who were forced to delay their decisions. Students and schools have already been racing against time since the FAFSA opened in late December. The form is usually available on October 1, giving families and schools the time they need to complete the application and determine scholarship eligibility, allowing students to make their college choice with knowledge of the final cost.

Colleges were expected to receive FAFSA applicant information by the end of January, four months later than usual. Inflation adjustments have pushed that timeline further into early March, meaning high school seniors likely won’t receive scholarship offers until at least April, and at the latest May or June, higher education experts said. Mark Kantrowitz.

If you applied for FAFSA aid but need additional funds for school, consider taking out a private student loan. Visit Credible to compare multiple student loans at once and find the one with the best interest rate.

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529 Plans are an Important Savings Tool

According to a College Ave survey, 44% of parents said they plan to use a 529 education savings plan to pay for some of the costs of college.

A 529 education savings plan is an investment account that offers tax-advantaged benefits when used for the account owner’s qualified education expenses. Earnings grow tax-free and distributions are federally tax-free when used for qualified education expenses. A recent Edward Jones survey found that the biggest barrier to accessing a 529 plan is the misconception that you need more savings or income to open one. investigation.

Although changes in federal and state laws have allowed 529 plans to be used for more purposes, only 25% of respondents knew these plans could be used for more than just higher education. Funds can also be used for room and board, a significant expense that may not be covered by scholarships. Savers can also use these funds to pay off student loans. Additionally, according to Edward Jones, unused funds can be rolled over into the beneficiary’s Roth IRA starting in 2024.

If you have private student loans, you can reduce your monthly payments by refinancing to a lower interest rate. Visit Credible to speak with an expert and get your questions answered.

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Do you have a finance-related question but don’t know who to ask? Email a trusted money expert email address: Your question might be answered in Credible’s Money Expert column.

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