From the “sticker shock” of college expenses to diving into college savings, parents are more confident about paying for college in 2021 than in 2020, according to a new survey. (IStock)
The pandemic is casting a shadow over the finances of many American families, and the rising cost of college remains an obstacle for young adults seeking higher education. But despite the challenges, according to a recent survey, parents are more confident of funding their children to get a college education in 2021.
Fewer families feel overwhelmed by the costs of college this year compared to last year – 55% in 2021 versus 71% in 2020, according to a survey of 1,045 parents conducted by College Ave Student Loans and Barnes & Noble College Insights.
Parents use a number of ways to fund their children with college education, from savings accounts to student loans. If you are considering taking out a personal student loan for your college student, you can pre-qualify on Credible to see the estimated rates and terms without affecting your credit score.
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The first step in funding a college education usually starts with submitting the FAFSA form to determine if your student is eligible for financial assistance. According to this, about a third (34%) of the parents will cover the costs through savings, while 16% use fixed assets and 10% plan to appeal their grant decision. Almost a quarter (24%) said they would take out student loans on behalf of their children.
The good news is that student loan rates remain at record lows. The 10 year fixed rate loan interest rates averaged 3.50% for borrowers with a credit score of 720 or higher who selected a lender on the Credible online loan marketplace on the week of June 14, 2021.
Make sure you are getting the lowest student loan interest rate for your child by shopping with multiple lenders on an online marketplace like Credible.
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Many parents are surprised by the cost of study, accommodation and meals
According to the survey, many parents found the price of higher education to be a “sticker shock”. But they were less surprised in 2021 than in 2020.
While it is common knowledge that college is expensive, this suggests that it is more expensive than parents planned.
Between FAFSA forms and scholarship and grant applications, you still may not get the money you need to fund your child’s education. In this case, you should think about a student loan. You can use Credible’s student loan repayment calculator to estimate your monthly payments.
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How to find out what type of student loan is right for your child
Student loans fall into two categories – government and private. Federal student loans come with safeguards like income-based repayment plans, loan forgiveness, and hardship leniency. However, federal loans may not fully cover the cost of a college education.
If you need to borrow even more money to pay for school, consider private student loans. It is a good time to start borrowing as the interest rates are low and you can search for the lowest possible personal loan interest rate on an online marketplace like Credible.
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Do you have a finance-related question but don’t know who to contact? Email the Credible Money Expert at firstname.lastname@example.org and your question could be answered by Credible in our Money Expert column.