Faced with numerous financial concerns, a growing number of middle-class parents are souring on college, according to a new report released this week. The Merill Edge Report, which canvasses the views of adults falling in the middle income bracket and which is published twice every year, finds that while middle-class parents continue to contribute a large chunk to their children’s college expenses, four in ten have been expressed worries that the price of higher education is now too high to be affordable.
The fallout from the recent financial collapse and ongoing recession means that even families with reasonable financial resources now must give college-related costs a second look. This is especially important in light of the fact that a growing number of families who have dipped into their savings to help finance their children’s higher education have subsequently found themselves in a financial hole of their own.
The proportion of people over 60 who are holding a loan and are more than 90 days overdue has jumped to nearly 10% this year from 6% in 2005. There are also growing numbers of people holding federal loans who are getting their Social Security checks garnished for repayment. There were only 23,996 such garnishments recorded in 2001. This year, there were nearly 120,000.
The growing price that students are expected to pay for their college degree makes it doubly important for everyone to make sure that the school they choose and the major they select provides a good return on the investment made in the form of tuition. According to Daily Finance, students who are hoping that a degree will provide a boost in their career should focus on majors in the technology and computer science industry while staying away from those in the social services sector.
The five lowest-paying majors are nearly all in the social service sector, while computer sciences and engineering programs continue to churn out high-paid workers. A recent PayScale study listed the median mid-career pay for a Petroleum Engineering major at $163,000 and the median mid-career pay for a Social Work major at just $45,300. Of the 1,000+ parents polled by Merrill Edge, just over one-third plan on relying on scholarships and grants, and about one-in-four will ask their kids to chip in. Yet again, one of the simplest ways to save for college is still vastly underused — just 20 percent of families take advantage of education savings plans, according to the report.
Even those parents who regret the choices they made when saving for college for their first children aren’t likely to avoid similar blunders when thinking of paying for college for their subsequent kids. Merill Edge finds that nearly half of those polled wished that they had been more aggressive in their savings strategies, yet only 32% have actually taken their own advice and learned from their mistakes when putting aside money for younger children.
As Daily Finance concludes, while the debate over the value of college education is likely to get more heated, the benefit of beginning to save for it as early as possible is universally recognized.