Whenever college is brought up, student loans inevitably work their way into the conversation. They have become somewhat synonymous with the overall college experience as demand for them rises each year. It is not too surprising given the costs associated with higher education.
A recent Financial Security Survey from Bankrate assessed the feelings of parents and students who are currently in college or soon going to college. The survey covered 1,000 parents over a few days, and the survey reveals some interesting results.
One of the first important findings reveals that more students are going to be taking out student loans; in fact, it is up 5% from four years ago. This is proof of the rising demand of student loans since 55% of parents admit to relying on student loans to finance their children's educations.
This is unsettling because of another reveal from the survey: approximately 25% of millennials claim that acquiring student loan debt is their greatest regret financially. This result is not too surprising, but it basically affirms the overall attitude towards financial loans. And this provides insight on what kinds of financial strain millennials are experiencing post graduation.
In addition to these findings, 32% of parents admitted that student loans are going to account for the majority of funding for their children's educations. This is the highest rate in almost half a decade, and it shows the lack of funding in many families with college aged children. Another study find reinforces this points; for instance, approximately 43% of parents admitted to limiting college choice based on price.
Here is more evidence of financial strain for parents: about 62% of parents claim they are going to help their kid pay off loans which is up by almost 7% from previous years. There are some bad repercussions from these financial decisions; for instance, parents put their kids' student loans before their own retirement funds which is a crippling move.
Less than half of the survey population filled out the Free Application for Federal Student Aid: an important move before moving on to higher education. To add on to this figure, nearly 50% of the population admitted to not filling out the application. Starting on this application early is an extremely important move to make before attending college.
Overall, these results reaffirm ideas about student loans and the financial strain they create for parents as well as new students. Of course, student loans are going to create a burden for whoever is involved, but there are ways to manage the loan effectively such as refinancing or consolidating.
Another extremely important aspect is to pick the right loan right from the start; considerations must be made when choosing different types of loans (federal or private) payment plans, payment terms, and interest rates. Careful consideration and understanding of these puts the borrower in an educated position which can only help when it comes to repayment.