While many colleges and universities have created online courses with the idea of keeping students safe, the majority of parents in a survey by the College Savings Foundation take issue with paying full price for their children to attend remote classes.
“They wonder what they are paying for if Junior is sitting in his bedroom all day and logging into a classroom for a couple of hours and they are paying $50,000, $40,000 or even $10,000 a year,” said Vivian Tsai, chair of the Washington, D.C.-based organization that helps families save for college.
“It creates a pause in the parents’ mind,” she said. “They wonder exactly what they are buying in this scenario.”
For its 14th annual survey of parents with children either in college or headed to college, the College Savings Foundation wanted to get a snapshot of how the COVID-19 pandemic had impacted families’ ability to pay for college and how it had changed their attitudes toward attending college and the cost of higher education.
College is a major investment, and with more families feeling the economic pinch of the pandemic, it’s harder to justify the price tag.
Most families surveyed, 61%, said they have experienced a shock to their finances this year that will affect their ability to cover college costs. In 53% of families, one income earner had lost a job or had income reduced, and 8% of families had a catastrophic experience with all sources of income lost.
Only 40% of those families surveyed were financially unaffected by COVID-19.
The survey of nearly 1,000 parents across the country also found that one-third (34%) of their college-age children had changed career plans; and 30% had altered the kind of higher-ed institution they planned to attend — with most of those attending public rather than private college, going to community college rather than a four-year school or taking a year off entirely.
In 2019-20, the average price of tuition and fees came to $36,880 at private colleges and $26,820 at public colleges.
The rising cost of tuition has always been a bone of contention. But the high price tag was an easier pill to swallow as long as the student was studying behind the ivy-covered walls of the college campus.
This year, the vast majority of students — 87% — will be either completely online (47%) or a mix of online and in-person learning on campus (40%), according to the foundation.
That is why it’s not surprising that 51% of parents told the College Savings Foundation they are not willing to pay full tuition for remote classes.
An overwhelming 89% said traditional in-person universities should discount tuition if classes were offered only online.
The good news is that the COVID-19 crisis has not affected parents’ desire to save for their children’s education, even if it has caused them to reevaluate how they choose to spend the funds.
Ms. Tsai said 529 savings plans had a combined total of $350 billion as of June 30, compared to $325 billion for the same time period last year. The average account balance across all such plans is $21,704.
529 Plans are tax-advantaged investment accounts designed to encourage families to save for college. The contributions are allowed to grow tax-deferred and the distributions from the accounts are not taxed if used to pay expenses for K-12 public, private and religious school expenses or higher education costs.
Parents in the survey also said they were avoiding debt in paying for their child’s higher education: 48% weren’t taking out loans, with 53% of those explaining that they do not want to incur debt in this economy — and 20% saying they do not think debt for education is a good idea ever.
“We are heartened to learn that families have maintained sound savings strategies that support their children’s higher education goals during a changing a challenging environment,” Ms. Tsai said.
Tim Grant: tgrant@post-gazette.com or 4120-263-1591
First Published: September 24, 2020, 10:19 a.m.
