The majority of teens feel unprepared to finance their future as they start to map out their college or work plans. A study by Junior Achievement USA and Citizens Bank shows that 54% of teens aged 13 – 18 are worried about financing their future. Most teens, and their families, are not prepared to finance their college education.
Before diving in, one of the best ways you can help alleviate a lot of the financial burden teens are feeling is by opening a 529 plan. It’s a college savings account where your money can grow tax-free as long as you use it to pay for college. Find out how to get started.
Learnings From the Survey
Taking a closer look at the survey provides some very interesting data points that we can draw from to get a better idea of how teens are feeling about their own futures. Here are some of the highlights:
- Nearly 70% of teens quoted rising higher education costs as a main driver of their post-graduation plans changing.
- 41% of teens said that they did not have any financial literacy classes in high school.
- 39% Said that if they had a better understanding of how student loans work then their concerns about the future would be eased.
- 38% Said they would like to know more about education and how it ties to their future job. The same group is interested in what lower-cost alternatives might be available.
- 28% of teens surveyed are only considering in-state schools because of the cost of education.
- 22% of teens are planning to live at home while they attend school in order to cut down on the total costs of college.
- 10% of those surveyed are now considering a 2-year degree over a 4-year degree.
This is an interesting study because it shows how teens are actually feeling about the heavy costs that come with going to college these days. There is so much talk about what parents can do and how worried they are for their children but kids are feeling the same pressure and know they aren’t prepared.
Teens’ Top Concerns About Going to College
Teens have a lot of worries about going to college, and they are slowly becoming more and more educated on the financial impact. When asked what their biggest concerns were about pursuing higher education, this is how they responded:
- Costs: 49%
- Taking on Student Loans: 43%
- Uncertainty About Their Future Career: 32%
- Lack of Return on Investment: 27%
- Moving Away From Home: 25%
Moving away from home and trying to meet a group of people where they fit in used to be the biggest concerns teens had when it came to going to college. Now their largest concerns are filled with financially motivated ones.
How Parents Can Help
The best thing parents can do to support their children today is to alleviate their financial concerns. While that might mean something different to every child, there are some best practices you can think about to see if each might help your kid(s).
1. Educate Kids in Financial Practices
One of the main takeaways from the survey is the fact that most teens don’t feel like they have enough financial knowledge to make educated decisions about their future. If your schools don’t provide financial literacy classes, or in many cases even if they do, then as a parent you can take it upon yourself to teach your kids basic financial knowledge.
2. Start a College Savings Account
Help your children maximize the amount of money they have to pay for their education by opening a college savings account. A 529 plan can provide you with a way to invest and grow your college savings in a tax-free account. This way when your children are ready to pay for college expenses they will have money ready to go and won’t have to immediately rely on loans to get by.
3. Teach Children About Alternatives
Some generations were taught that college was the only way to have a fulfilled work life. That may not be the case anymore and it’s important to make sure your children know what the alternatives are and how choosing one of those alternatives could impact their life. College savings plans might also be used to pay for alternatives such as trade school.
4. Run the Numbers With Your Teens
Don’t let your teens go through the struggle of paying for college on their own. Instead, you can be active in helping them not only better understand their options but in having a deep knowledge of how much it will cost them. Help them understand the potential ROI of going to college and how much it will cost them that they’ll have to borrow. This will help them make more informed and confident decisions for their future.
The Bottom Line
The survey contains a lot of interesting data but all of it points to the fact that teens are worried about how expensive college is and feel like they don’t have the right knowledge to make an informed decision. These are things that we can help with and the earlier you start saving and teaching your kids, the better off they will be.