Surprised by the Cost of College: New Survey from College Ave Highlights Students' Financial Approaches - From Funding a College Degree to Building an Emergency Fund

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May 08, 2024, 11:09 ET

Parents are the number one source of financial information for students, finds survey

WILMINGTON, Del., May 8, 2024 /PRNewswire/ -- With high school graduation around the corner, many high school seniors will have more financial independence as they start their college journey. And that journey will likely include some surprises. Two-thirds of college students (66%) report that college costs were more than they expected – $10,000 or more for around 1 out of 4 (26%) who reported higher costs – according to a recent College Ave survey of college students at 4-year universities conducted by Barnes & Noble College Insights. Perhaps, that's why the majority report that paying for college is stressful (68%) and for some, confusing (46%). Despite the surprises, stress and confusion, many college students demonstrate a remarkable commitment to their education, and find resourceful ways to fund their college education while balancing their personal financial goals.

Paying for College

Many college students invest in the college education through scholarships and grants, loans, and their own income and savings. Around half (51%) use scholarships, grants and merit aid to help pay for college, and for some, that is a significant amount. Of the 89% of students who received merit aid their first year of college, 53% report the amount was up to $20,000. For close to half (48%) of those receiving merit aid, that amount stayed the same or increased over their years in school.

In addition, 40% borrow federal student loans while 16% will borrow private student loans. For those students who are borrowing, they estimate that they will borrow an average of around $39,000 over the course of college. More than one-third (37%) of students also report that they will use their personal savings or income to pay for their higher education.

Managing Money

Many college students have a good handle on managing their money, too. Close to two-thirds (63%) report that they have personal financial goals that they are working toward, with managing their budget, building and saving an emergency fund and cutting expenses ranking as the top three. More than half feel like they have a good understanding of checking accounts (69%) and savings accounts (64%). In addition, more than two-thirds (69%) report having a job while in college.

"The College Ave survey highlights the active financial role students play in achieving their higher education goals," said Angela Colatriano, Chief Marketing Officer, College Ave. "Whether it's earning good grades and excelling at extra curriculars to be competitive for scholarships, or working and saving money to help pay for college, students are showing they are determined, resilient, and driven."

For parents helping high school graduates enter life's next big stage on solid financial footing, College Ave offers these tips:

Set expectations around the cost of college. The survey found the most important factor in making the final college decision was academic majors (30%), followed by the overall cost of school (25%) and location (21%). However, make the cost of college a priority discussion to have in your family. Be frank about what you can contribute from current income and savings and what options your family can explore if there are still costs to be covered.
Help them understand student loan debt. 67% of students who took on student loan debt did not know or were unsure what their student loan payment would be. While most knew they would pay more than they borrowed (83%), two-thirds (66%) were worried it would be a larger part of their future budget than anticipated. One tool to help students estimate the total cost of the loan and what their monthly payment will look like is with the College Ave Student Loan Calculator.
Give your child a personal finance 101. Nearly 3 out of 4 students (74%) report parents were their number one source of personal finance knowledge. However, less than half of students report they keep a personal budget (47%) or save while in college (46%). In addition, less than one-third felt comfortable with terms associated with student loans (31%). Parents can play a crucial role in helping students become proficient at personal finance basics – from budgeting and saving to investing and how interest rates work – that will help their child as they transition into adulthood.
Encourage smart credit card management. Around half (55%) of students report they have a credit card in their name. And while more than half (57%) report they can pay off their credit card in full each month, around 1 in 4 (26%) report they have credit card debt. Less than half (40%) know how interest works, according to the survey. Teach smart credit card basics, including paying your bill in full and on time each month. One good tool is the Ambition Mastercard® by College Ave, a secured credit card designed for students. It features no interest or late fees and cash back on all purchases. Importantly, the parents or student put a deposit on the card which sets the spending limit, so there are no worries about overspending.
Help them look ahead financially. Less than half (43%) know their credit score or have looked at their credit report (27%). Help your child understand that establishing good financial habits now will help them in the future. Establishing a good credit history while in college helps them qualify for better interest rates on loans and can even be important when it comes to leasing an apartment. One way to help build a positive credit history is with the Ambition card as all on-time payments are reported to the three main credit bureaus.

Despite the challenges and surprises that college students may encounter when gaining more financial independence, students and their families are taking a thoughtful and proactive approach to preparing for the college years. For more information and tools on how to plan and pay for college, visit: collegeave.com.

About College Ave
College Ave started with a big vision and a simple mission – take the stress out of paying for college so students can focus on preparing for a bright future. Now a leading financial services company, College Ave remains committed to using best-in-class technology and deep industry expertise to deliver practical and personal solutions that give young adults a running start on their roads to financial success. We offer best-in-class products with competitive rates and a customer-friendly experience from start to finish. Visit: collegeave.com.

About the Survey
The College Ave survey was conducted by Barnes & Noble College Insights ™. The national online survey of undergraduate students who attend a 4-year college or university at one of the campuses served by Barnes & Noble College had 1,007 respondents and was fielded in late February-March 2024. Last year, Barnes & Noble College Insights conducted more than 50 research studies and 100+ survey polls of students, faculty and parents that interact with one of its more than 770+ campus bookstores across the nation.

SOURCE College Ave