Despite the fact that a significant number of families are having tough early conversations about paying for college, a new Citizens Bank survey shows that they still wish they had more time to plan, and the process is more difficult than expected.
In its second annual Student Lending Survey, Citizens found almost one-third (30%) of parents say that they first spoke to their children about paying for school when they were in the 8th grade or earlier, and more than half (53%) before the end of their child’s freshman year. While this is an encouraging trend and suggests that families are looking more closely at the long-term implications of student loan debt, a smaller number (9% when their kids were in the 8th grade) were actually looking into loan options available in the market during that time.
“While it is encouraging that more families are having the conversation early about the realities of paying for school, the data shows that 63% of parents still wish they had more time to navigate a difficult and confusing process,” said Brendan Coughlin, president of Consumer Deposits and Lending at Citizens Bank. “It’s clear that more has to be done to help prepare students for the future — whether it is through helping them navigate paying for college or educating them on how to manage their money by establishing savings and checking accounts.”
An interesting theme emerging from the survey suggests that students are looking more closely at the long-term impact of student debt. Parents (57%) are slightly more likely to agree that the cost of college was worth it versus students (50%). Compare that to the fact that a smaller percentage of students than parents (51% vs. 58%) believe that parents should help their children pay for college.
Overall, families are still paying for college through a combination of different sources that include both income and savings and also both Federal and private student loans. To that point, the survey showed a wide gap on families’ savings strategies -- 44% of parents have started to save for their kid’s college education before their child’s 11th birthday, while 38% report setting aside no savings at all. This means that families are often looking around at the last minute to fill any funding gaps.
“As tuition bills are sent out to families with children attending college this fall, it is important that they look at all of their options to fill any funding gaps,” said Coughlin. “For those who choose student loans, private student loans can be a good option and may offer lower rates depending on an individual’s credit profile.”
While these trends are encouraging, more than half of parents (55%) and students (56%) still report that the entire process of researching, comparing, and selecting a student loan was much more difficult than they thought. Two thirds (66%) of both parents and students agree that paying off student loans has taken longer than they expected. Additionally, 63% of parents and 60% of students say they wished they looked into college financing options earlier.
Citizens Bank is a leader in student lending and offers numerous borrowing options for credit-qualified students, graduates, along with their families including the Citizens Bank Parent Loan, Citizens Bank Student Loan, and the Citizens Bank Student Loan with Multi-Year Approval. In addition through its Education Refinance Loan, Citizens Bank is the only national bank to offer refinancing options for both private and federal student loans to credit-qualified borrowers.
On behalf of Citizens Financial Group, Comperemedia, a Mintel Company, conducted a nationally representative online survey of n=2,053 respondents, with n=1,036 parents and 1,017 students included. The survey was developed to generate insights on attitudes toward cost, affordability, and ROI of higher education; Contribution of parents and students in paying for college/higher education; Discussions between parents and children on college financing (e.g., timing, format, role of admissions counselors); And decision factors in choosing a college (e.g., programs offered, campus, cost, etc.).
About Citizens Financial Group, Inc.
Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $162.7 billion in assets as of June 30, 2019. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. Citizens helps its customers reach their potential by listening to them and by understanding their needs in order to offer tailored advice, ideas and solutions. In Consumer Banking, Citizens provides an integrated experience that includes mobile and online banking, a 24/7 customer contact center and the convenience of approximately 2,900 ATMs and approximately 1,100 branches in 11 states in the New England, Mid-Atlantic and Midwest regions. Consumer Banking products and services include a full range of banking, lending, savings, wealth management and small business offerings. In Commercial Banking, Citizens offers corporate, institutional and not-for-profit clients a full range of wholesale banking products and services, including lending and deposits, capital markets, treasury services, foreign exchange and interest rate products, and asset finance. More information is available at www.citizensbank.com or visit us on Twitter, LinkedIn or Facebook.