71% of students would rather take on student loan debt themselves versus have their parents take out debt for them.
New York, NY – December 11, 2019 – With student debt topping $1.6T in the U.S., many parents are sacrificing their own personal milestones in order to finance their children’s college education. As a result, Baby Boomers (ages 56 and older) have become the fastest-growing group of student debt carriers1. According to a new U.S. survey by Laurel Road—a digital lending platform for student loan refinancing, mortgage and personal loans—polling 500 parents who helped a child pay for college and 500 college attendees whose parents helped pay for college, the majority of parents put their children’s education before their own financial needs (78%). Despite financial assistance from parents, the vast majority of students still took cost-saving measures in an effort to lessen the financial burden (90%).
The vast majority of parents surveyed believe that young people should pursue their career passions over earning potential (82%). To give them the financial freedom to do so, parents would rather take on student loan debt themselves (56%). 81% of parents surveyed also report making material changes to their finances to make this possible, including taking on credit card debt (28%), staying in a job longer than they wanted (24%), and even withdrawing from a retirement account (21%). Despite these sacrifices, parents have no regrets – more than 3 in 5 (63%) parents say they’d contribute the same amount toward their child’s education if they had the chance to do so again, and 29% said they would actually contribute more.
“As a company that believes student debt should not stand in the way of people’s life goals at any age, we wanted to dig further into why Baby Boomers had become the fastest-growing group of student debt carriers and how that was impacting family dynamics,” said Alyssa Schaefer, Chief Marketing Officer of Laurel Road. “Through this research, we found that parents believe higher education is an important investment to help their college-age children achieve the life they want. Despite the material effects student loans have on parents, they are putting their children’s financial needs first.”
Financial support is essential to giving students a classic college experience
As the cost of education rises steadily, a vast majority of students surveyed (87%) say their college experience would have been different without the financial assistance of parents. Without this essential support, students surveyed said they would have been unable to work as hard at achieving good grades (28%) or would not have attended college at all (26%).
Despite financial support, students still make an effort to save
Almost the entirety of students surveyed (95%) whose parents changed their financial habits to finance their education have considered the sacrifice of their parents by actively taking steps to save more. Students reported buying or borrowing used textbooks instead of new (58%), getting a job that pays more instead of aligning with their interests (41%), skipping out of social activities to save money (39%), or starting a business or side hustle (17%) to better position themselves financially.
Parents and children weigh the cost of college differently
While both parents and students agree that young people should prioritize passions over earning potential, when weighing cost versus quality of education, students rank cost (33%) to be the top consideration when selecting a college. Parents’ considerations are more in line with their priorities, ranking the quality of the degree/program as the most important consideration (41%) when selecting a college over cost (22%).
Starting salary of the degree/program ranks among the lowest priorities for students (3%) and parents (2%), suggesting that both groups are not necessarily focused on ROI when students are just starting out.
“Not only do we see a sense of mutual responsibility for the cost of education throughout this data set, but the findings truly personify the empathy and gratitude felt amongst students for their parents’ contributions to help them pay for college,” Schaefer added. “This data shows that student debt really is a family affair, and shared accountability and passion help motivate students to turn their education into a fulfilling career and rewarding life.”
Money Talks: When parents are footing the bill, they seem to get more of a say in the decision-making process, though the ideal input differs across generations.
- 82% of parents who helped a child pay for college were involved in choosing which college their child went to
- Baby Boomers parents surveyed say it’s more the student’s decision to choose where they go to school (76%) as compared with Gen-X parents surveyed (55 or younger) at 62%
Higher Learning: Students feel they need to be financially supported at least to the point of meeting basic qualifications for today’s job market.
- More than half (51%) of students feel parents are obligated to help them financially in obtaining an undergraduate degree, falling off drastically for a master’s degree (7%) and law, medical or PhD (2%)
The Experience Effect: Parents who have completed at least a bachelor’s degree are more likely (54%) to believe that parents should financially support their children until they get at least a bachelor’s degree of their own, compared to parents who haven’t attained a bachelor’s or more (30%).
Paying it Forward: 60% of students surveyed would pay their parents back first if they won the lottery, instead of first buying themselves a house.
About Laurel Road
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $5 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products, mortgages and personal loans that helps simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. For more information, visit www.laurelroad.com. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. The mortgage product is not offered in Puerto Rico. KeyBank is a Member FDIC, Equal Housing Lender. NMLS ID # 399797.