Discover Student Loans Annual Survey: Majority of Parents Worried about Long-Term Impact of Student Loan Debt

Survey Reveals Parents are Worried About Covering the Cost of College But Are Split When Factoring Price Into Decision-Making Process

Business Wire

RIVERWOODS, Ill.--(BUSINESS WIRE)--

The third annual survey from Discover Student Loans reveals that while 96 percent of parents continue to see the value of a college education, 85 percent are very or somewhat worried that student loan debt will affect their child’s ability to buy a home, car or other large purchase after college.

Although parents are concerned about student loan debt, they appear less likely to include the price of a university in the decision-making process. Forty-eight percent of parents said that cost would not be a factor when choosing a college, an 8 percent increase from 2013. Forty-four percent of parents said they were planning to limit college choices based on price and 9 percent were not sure, both decreases from the previous year.

“It is promising to see families recognize the investment in a college education and are considering their children’s long-term financial health beyond graduation,” said Danny Ray, president of Discover Student Loans. “We hope that this annual survey brings to light the need for families to review all of their options when going to college. We encourage students to always use free money first when financing a college education and then, if needed, determine what lending options work best for their needs.”

Parents Still Worry about Cost

Seventy-seven percent of parents said they plan to help their child pay for college, a slight decrease from 81 percent in 2013. Sixteen percent of families don’t plan on contributing anything.

While families want to help pay for college, parents routinely said they are worried about having enough money. Throughout the last three years, numbers have remained fairly consistent with three out of four families saying they are very or somewhat worried about having enough money to cover college costs. A quarter of parents are not very or not at all worried about having enough money.

Parents also are not limiting their financial support based on what course of study their child chooses. More than half of parents, 53 percent, said choice of major and earning potential played no part in their decision to fund their child’s education, while 33 percent of parents plan to limit funding based on their child’s major.

Parents Shift Repayment to Students

The number of parents who say their child should pay for most or all of their college education has increased for the past three years. In 2014, 15 percent of parents responded saying their children should pay for the entire cost of college, compared to 12 percent in 2012. Thirty-two percent of parents think their child should pay for most of their schooling, compared to 27 percent in 2012.

Parents also are split on whether they will assist their child with repayment. Only 52 percent say they are likely to help their child repay loans, with 24 percent saying very likely and 28 percent say somewhat likely, compared to 58 percent in 2013.

When asked about student loans, 52 percent of parents said their child plans to take out student loans to pay for college, with 48 percent planning to use both federal and private student loans.

“As students prepare to enter college this fall, it’s important for parents to have clear and honest discussions with their children about how they’ll pay for college,” Ray said. “Students need to understand the financial responsibilities they take on and, more importantly, who is responsible for repayment of loans upon graduation.”

Financial Resources at College

As parents seek to determine the right mix of funding for their child, 44 percent cite college financial aid offices as the most trusted resources for information-the third consecutive year where they have ranked the highest. Fourteen percent of parents turn to personal financial advisors and 9 percent to friends and family. High school guidance counselors rank slightly higher than the internet when gathering reliable information about college, at 7 and 6 percent respectively, according to the survey.

About the Survey

The Discover national survey of 1,000 adults who have children 16 to 18 years old who are planning to attend college was conducted May 15-20, 2014, by Rasmussen Reports, an independent survey research firm (http://www.rasmussenreports.com). The margin of sampling error was +/-3 percentage points with a 95 percent level of confidence.

About Discover

Discover Financial Services (DFS) is a direct banking and payment services company with one of the most recognized brands in U.S. financial services. Since its inception in 1986, the company has become one of the largest card issuers in the United States. The company issues the Discover card, America's cash rewards pioneer, and offers home loans, private student loans, personal loans, home equity loans, checking and savings accounts, certificates of deposit and money market accounts through its direct banking business. It operates the Discover Network, with millions of merchant and cash access locations; PULSE, one of the nation's leading ATM/debit networks; and Diners Club International, a global payments network with acceptance in more than 185 countries and territories. For more information, visit www.discover.com/company.

National survey of 1000 adults with children 16 to 18 years old who have children planning on going to college

Conducted May 15-20, 2014 By Rasmussen Reports
Margin of sampling error: +/- 3 percentage points with a 95 percent level of confidence
Commissioned by Discover Student Loans

           
2014     2013     2012     How important is college to your child’s future?
85% 87% 81% Very important
11% 11% 14% Somewhat important
3% 1% 3% Not very important
1% 0% 1% Not at all important
0% 0% 1% Not sure
 
2014     2013     2012     Beyond tuition, how knowledgeable do you feel about the entire cost of a college education?
48%     49%     48%     Very knowledgeable
42% 39% 39% Somewhat knowledgeable
8% 9% 11% Not very knowledgeable
2% 3% 2% Not at all knowledgeable
0% 0% 1% Not sure
 
2014     2013     2012     Will you be helping your child pay for his/her college education?
77%     81%     74%     Yes
16% 12% 15% No
7% 8% 11% Not sure
 

2014

    2013     2012     How worried are you about having enough money to help pay for your child’s college education?
44%     47%     47%     Very worried
30% 32% 28% Somewhat worried
18% 15% 17% Not very worried
7% 6% 6% Not at all worried
1% 0% 1% Not sure
 
2014     2013     2012     How much of your child’s education can you afford?
21%     21%     24%     None of it
30% 29% 29% Up to 25%
19% 18% 15% Up to 50%
11% 12% 10% Up to 75%
11% 11% 13% All of it
8% 9% 10% Not sure
 
2014     2013     2012     Where will most of the money come from to pay for your child’s college education?
11%     11%     12%     529 savings plan
29% 27% 24% Family savings
29% 29% 28% Student loans
5% 6% 5% A second job
2% 3% 3% 2nd mortgage or refinance
6% 4% 4% Retirement funds
10% 12% 13% Some other source
7% 10% 11% Not sure
 

2014

    2013                 How knowledgeable are you on the difference between federal and private loans? *
30%     29%                 Very knowledgeable
40% 39% Somewhat knowledgeable
22% 24% Not very knowledgeable
7% 6% Not at all knowledgeable
1% 1% Not sure
 
2014     2013                 Is your child planning to use student loans to pay for their college education? *
52%     50%                 Yes
28% 32% No
20% 18% Not sure
 
2014***     2013           Does your child plan to use federal student loans, private loans or a combination of both? *
38%     32%           Federal loans
3% 4% Private loans
48% 54% A combination of both
11% 10% Not sure
 
2014     2013     2012    

Which do you consider the most reliable source of information on paying for college?

7%     6%     7%     Guidance counselors in high school
44% 47% 47% Financial aid offices of colleges
3% 3% 3% Banks and other lenders
14% 13% 11% Personal financial advisors
9% 8% 6% Friends and family
6% 7% 6% The internet
8% 8% 8% Some other source
9% 9% 11% Not sure
 
2014     2013     2012     How much responsibility should your child have in paying for their education?
15%     13%     12%     All of it
32% 29% 27% Most of it
43% 48% 48% Some of it
8% 7% 10% None of it
2% 3% 3% Not sure
 

2014

    2013                 If you are taking out loans in your child’s name, does your child understand how much debt they will graduate with? *
42%     40%                 Fully understands
32% 32% Somewhat understands
14% 15% Doesn’t understand
12% 13% Not sure
 

2014

    2013     2012     If your child had to rely on student loans or other types of loans for college, how likely are you to help them pay back the loans? *
24%     25%     22%     Very likely
28% 33% 33% Somewhat likely
30% 25% 28% Not very likely
12% 13% 13% Not at all likely
6% 4% 4% Not sure
 

 

2014

  2013   2012    

Is earning potential after graduation more or less important to your child’s education than his or her major?*

40%   42% 38%     More important
21% 22% 32% Less important
30% 31% 21% About as important
9% 5% 10% Not sure

 

2014

  2013         Are you limiting your child’s college choice based on price?*
44% 49% Yes
48% 40% No
9% 11% Not sure

 

2014

  2013         Are you more likely to help fund your child’s education if they major in a field that has a higher likelihood of them landing a job? *
33% 42% Yes
53% 44% No
14% 14% Not sure
 

 

 

2014***

      How worried are you that student loan debt may affect your child’s ability to buy a house, car or some other large purchase after graduation? **
55% Very worried
30% Somewhat worried
12% Not very worried
3% Not at all worried
0% Not sure
 

* not asked in 2012
** not asked in 2012 or 2013
*** answered by 517 respondents who said their child was planning to use student loans to pay for their college education

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Contact:
Discover Financial Services
Rob Weiss, 224-405-6304
robertweiss@discover.com

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