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T. Rowe Price Survey Finds Kids Expect Parents To Cover The Cost Of Whatever College They Want And Parents Are Unprepared

Parents, Kids & Money Survey finds that college costs keep many parents up at night and most feel guilty that they will not be able to pay for more of their kids’ college education  

Parents with student loans are significantly more likely to have credit card debt and payday loans



T. Rowe Price’s 2016 Parents, Kids & Money Survey, which sampled 1,086 parents nationally and their 8 to 14 year old kids, found that many kids (62%) expect their parents to cover the cost of “whatever college I want to go to.” Yet most parents (65%) will only be able to contribute some to the cost of college. And the results suggest that student loans can lead to increased anxiety and financial stress. Parents with their own student loans are more likely to lose sleep over college costs (49% vs. 40%) and are significantly more likely to have credit card debt (67% vs. 54%) and payday loans (19% vs. 7%).

There are positive findings, however, as most parents are saving for their kids’ college (58%) and recognize the need to begin saving when their kids are young, with 68% saying under age 10, including 47% who say under age 5. And while some parents may not be using the most appropriate type of account to save for college, which include low-interest savings accounts (42%) and retirement accounts that penalize savers for withdrawing money before retirement (27%), a significant percentage of the parents who are saving are getting it right by using a tax-advantaged 529 plan (37%) to save for their kids’ college.

Judith Ward, CFP®, a senior financial planner at T. Rowe Price and mother of two college graduates, noted, “Preparing for college entails more than studying for the SATs and should begin before kids have even started Kindergarten. It starts with saving for college in a 529 account and having regular money conversations at a young age, so they’ll later be able to conceptualize the financial trade-offs involved in selecting a college.

“The benefits of a college education can become overshadowed by the burden of debt, if parents haven’t saved towards a college education and had money conversations with their kids to manage expectations of how much of their college costs they can cover. It’s surprising that most kids expect their parents to cover whatever college they want to go to—and presents a real opportunity to discuss family finances and make sure everyone is on the same page.”

T. Rowe Price encourages parents to invest in their kids' futures by talking to them about money matters weekly and saving for their college. The survey found that parents who discuss financial topics with their kids at least once a week are nearly twice as likely to have kids who say they are smart about money (68% vs. 36%). To help, the firm created, which provides free online games for kids; tips for parents that are focused on financial concepts such as goal setting, spending versus saving, inflation, asset allocation, and investment diversification; as well as lessons for educators.

Additionally, the firm launched The College Savings Chill Out to help relieve the stress parents feel when thinking about college costs. Sales from the companion book, Everybody Freaks Out! But It’s Going to Be Okay, a lighthearted story of how two fictitious parents moved past their college savings panic, benefit Junior Achievement USA®, nonprofit organization focused on promoting financial literacy.





  • Kids expect parents to cover their college costs: 62% of kids agree with the statement, “I expect my parents to cover the cost of whatever college I want to go to.”
  • But parents may not be able to meet kids’ expectations: Only 35% of parents will be able to cover at least most of college costs, including 12% of parents who indicated they will be able to pay the entire cost of college.
  • Some kids think their parents are saving for their college when they are not: 67% of kids say their parents are saving for their college. But, nearly a quarter of those (23%) have parents who said that they actually are not saving for their college.
  • And many parents feel guilty: 63% of parents agree with the statement, “I feel guilty that I won’t be able to pay more for their college.”
  • College costs keep more parents up at night today: 42% of parents agree with the statement, “I lose sleep worrying about college costs,” up significantly from 2014 when the same question was asked and 28% of parents indicated that they lose sleep over college costs.2
  • Parents are willing to work more to cover college costs: 76% of parents would be willing to delay their retirement and 68% would be willing to get a second or part-time job to pay for kids’ college education.
  • And parents tend to underestimate college costs: While the total cost of a four-year education at an in-state university is currently about $80,000 on average, according to The College Board1, only 35% of parents think that the total cost of a four-year education at an in-state university is $80,000 or more.



  • More than a quarter of parents have student loans: 28% of parents are paying back student loans, either for their own education (20%) or their kids’ education (12%). A minority of parents (5%) have both student loan debt for their own education and their kids’.
  • Parents with student debt are more likely to have credit card debt and payday loans: Parents paying off student loans from their own education are significantly more likely to have credit card debt (67% vs. 54%) and payday loans (19% vs. 7%). And parents paying back loans for their kids’ education are even more likely to have credit card debt (75% vs. 54%) and payday loan debt (38% vs. 5%).
  • Some parents are willing to take on considerable student loan debt: 57% of parents are willing to take on $25,000 or more in debt to pay for their kids’ college education, with 19% willing to borrow $100,000 or more.
  • And they are willing to let their kids take student loans: Nearly half (47%) are willing to let their kids borrow $25,000 or more, with 14% willing to let their kids take out $100,000 or more in student debt.
  • Parents who have student debt are more willing to take on higher levels of debt: Parents who are paying back their own student loans are more willing to borrow $100,000 or more themselves to pay for their kids’ college (24% vs. 18%).



  • More parents have money saved for their kids’ college than their own retirement: While 58% of parents said they had money saved for their kids’ college education, only 54% indicated they had money saved for their retirement.
  • Parents sometimes use the wrong account to save for college: 43% of parents are using a regular savings account to save for their kids’ college and 27% are using a retirement account (401(k) or IRA). 37% are saving appropriately by using 529 college savings account.
  • Millennials are less likely to use 529 college savings accounts: Nearly half as many Millennials are saving for their kids’ college in a 529 account (22%) compared with Gen Xer (42%) and Baby Boomer (42%) parents.
  • Parents using 529 accounts are less likely to spend college savings on other things: 38% of parents saving for their kid’s college in a 529 account have used their college savings to pay for other expenses, compared to 49% of parents who are not using a 529 account to save for college. Common reasons for taking money out of college savings including paying for vacation (13%), taxes (13%), health care (12%), home repair or renovation (12%), and paying off debt (12%).
  • Most parents recognize the need to start saving for college early: 68% of parents think they should start saving for their kids’ college education when their kids are 10 or younger, including 28% of parents that think kids should be 1 years old when they start saving for college. However, nearly one-fifth (19%) of parents think that they should wait until their kids are teenagers to start saving for their college education.


1National Average Cost Data: ©2016 The College Board, “Trends in College Pricing 2015.”

22014 T. Rowe Price Parents, Kids & Money Survey

Please note that a 529 plan’s disclosure document includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. You should compare any 529 college savings plan with the 529 college savings plan offered by your home state or your beneficiary’s home state. Before investing, consider any state tax or other benefits that are only available for investments in the home state’s plan.


The eighth annual T. Rowe Price Parents, Kids & Money Survey, conducted by MetrixLab, Inc., aimed to understand the basic financial knowledge, attitudes, and behaviors of both parents of kids ages eight to 14 and their kids ages 8 to 14. The survey was fielded from February 4, 2016 through February 11, 2016, with a sample size of 1,086 parents and 1,086 kids ages 8 to 14. The margin of error is +/- 3 percentage points. All statistical testing done among subgroups (e.g., boys versus girls) is conducted at the 95% confidence level. Reporting includes only findings that are statistically significant at this level.


Founded in 1937, Baltimore-based T. Rowe Price Group, Inc. ( is a global investment management organization with $776.6 billion in assets under management as of June 30, 2016. The organization provides a broad array of mutual funds, subadvisory services, and separate account management for individual and institutional investors, retirement plans, and financial intermediaries. The company also offers a variety of sophisticated investment planning and guidance tools. T. Rowe Price's disciplined, risk-aware investment approach focuses on diversification, style consistency, and fundamental research. For more information, visit or our Twitter, YouTube, LinkedIn, and Facebook sites.