Jessica Turner gave birth to Justin just two years ago and Jamie one year ago, and already the two boys have a college savings account. Instead of birthday presents and Christmas clothes, the Turner family prefers that gift givers provide cash to the boys’ 529 accounts, opened at a local bank in their home town of Raleigh. So far, Jessica and her husband Harvey have around $2,000 per child in the accounts, and they hope to have enough later to offset the rising costs of higher education.
The Turners are part of the minority of people in America who are taking advantage of the 529 account, according to a new How Americans Pay For College report recently released by Sallie Mae. But, like the rest of America, they are also trying to figure out how to pay for higher education when the time comes.
“With any luck they will want to attend an in-state school,” says Jessica Turner, a hospitality worker turned stay at home mom. “But if they don’t, then we will still have options. And I fully anticipate them being smart enough to qualify for grants and scholarships.”
The Sallie Mae study quantifies the experiences and thoughts of the Turner family and many others. Some 85% of parents surveyed said they “knew” their child – even from preschool age – would attend college. But only 13% used a 529 account to plan in advance for college fees for the year 2017.
Most parents said they didn’t have a plan at all.
The Turners don’t want to get to the end of high school and not have cash for at least the first two years of college. “I’m finally paying off my own college loans,” says Harvey Turner, a medical device retailer who spent several years studying pre-med before discovering that he would switch majors and eventually secure a job in the research triangle. “With the way fees are rising, I want my kids to at least have some of it paid for before they arrive.”
According to Sallie Mae, today’s families use a mix of grants, scholarships, money from family and financial aid to put together the amounts needed to pay for a college or university institution, which averaged $24,000 for the 2016-2017 school year. That said, the same families surveyed listed both academics and location as the top two reasons for selecting a school. Other interesting findings from the study are that only four in ten families plan out, well in advance, how they will pay for college even though financial advisors suggest creating a plan early.
“Paying for college is increasingly becoming a shared responsibility between students and parents,” says Rick Castellano, a spokesman for Sallie Mae. “Families are also becoming more cost conscious, taking deliberate steps to make college more affordable. Sometimes the hardest part is simply getting started, but we know those with a plan save more and ultimately borrow less.”
Make College Affordable Now
The majority of students who pay for college right now are trying to keep it affordable by doing two very simple things: using in-state tuition and bringing in a roommate to help share in housing costs, according to the study.
Yves Cabral is one of the 47% of students who is sharing housing to keep costs down. He rents a Miami apartment with three friends who all go to two schools in the area, including Miami-Dade Community College and The University of Florida. He is among the 73% of students who use in-state tuition to get a discount. And, he is among the 50% of colleges students who “work more” to help pay for college and in Cabral’s case that means a job at a South Beach restaurant, where he picks up decent tips even on week nights.
“It’s nice to know that I’m not alone in trying to figure this out,” says Cabral when he learned about the figures behind the Sallie Mae study. “I’m doing everything I can to make this thing work. It’s hard.”
Cabral’s experiences are fairly typical, says Julia Clark, senior vice-president for Ipsos Public Affairs which worked on the survey with Sallie Mae. “What the data makes clear is the fact that college decision makers are becoming increasingly savvy and cost conscious,” says Clark. “We have seen FAFSA filings increase over the decade-long span of this study – and we see the use of scholarships and grants rising too, with half of families using them as a means of paying for college.”
The trend will likely continue, say experts, as potential students look to higher education as a way to guarantee future employment. Paying $33,500 a year can be a pain, says Danielle Brantley, a St. Xavier University student in Chicago, but it’s worth the investment.
“You can’t get a job without a degree, at least not the type of job I want to get,” says Brantley, a writing and rhetoric major, who jokes that “you can’t even get a minimum wage job now without a bachelor’s degree.”
She goes on about how the state of Illinois removed access to MAP grants, making it more difficult for deserving students to finance school. But she has found a way out of no way. “Can I quote Diddy?” she says. “Can’t stop. Won’t stop.”