Think Your Parents Will Pay for College? Think Again

Everyone from researchers and reporters to politicians and educators has an opinion on student loan debt’s impact on the economy, but that’s not the only thing up for debate. The rise of student loan debt and conversations surrounding it has changed the family dynamic, as more people are approaching higher education as a financial partnership between child and parent.

Jodi Okun has noticed a significant change in family conversations about college in the decade or so she’s been working with students and their parents. The fact that these conversations are even happening and that they’re occurring more frequently is a significant sign of progress, she said. Okun is the founder of College Financial Aid Advisors and is a brand ambassador for Discover Student Loans.

Parents Can’t Pay Like They Used To

In a new survey from Discover Student Loans, 33% of parents said they plan to limit funding based on their child’s chosen course of study (53% said their student’s major would have no effect on their funding choices). At face value, the stance of those 33% of parents might seem a bit harsh, but Okun said it’s a good thing: It indicates parents are looking beyond the four years of college when considering the value of their child’s education.

“Parents are becoming educated enough to ask their students what they want to do and talk about what it means to pick a major and understand its ROI, return on investment,” Okun said.

The media coverage of ballooning education debt, in addition to rising college costs and increased access to educational tools, has been a bit of a wake-up call for families prioritizing higher education. Fewer parents plan on financially contributing to their child’s post-secondary schooling: 77% of those surveyed in 2014 said they’d chip in, down from 81% in 2013. The survey is based on May interviews of 1,000 adults who have children ages 16 to 18 planning to attend college, and the margin of error is plus or minus 3 percentage points. As such, that difference may not be statistically significant, but Okun said she’s seen those statistics reflected in her personal dealings with families.

“I definitely see the trend going that way, and I like that trend,” Okun said. “I think it’s that parents can’t take it on anymore. They can’t take on helping their students maybe as much as they wanted to help them or planned to help them, so they’re saying, ‘Let’s embark on this together.'”

She said more parents are discussing financial literacy with their kids and what it means to borrow responsibly for education. Discover Student Loans recently launched a resource for students and parents so they can compare the payoff of various college majors, and tools like that and other education ROI estimators are essential to students making affordable choices when planning their careers.

The Need for Students to Have Adult Conversations

As good as these resources are, it’s apparent families continue to struggle grasping the cost of college. Among 2012 college graduates, 71% carried student loan debt upon receiving their diplomas, with an average debt load of $29,400, according to the Project on Student Debt. At the same time, only 52% of parents surveyed by Discover Student Loans said their children would have to take out student loans in college. Some estimates put the class of 2014’s likely debt load at about $33,000.

If Okun’s assessments of family trends are accurate, it’s a good sign that parents and students are working toward more open discussions about debt (lest they end up like this young woman, who graduated with six-figure debt she believed her parents would be paying). The impact of unaffordable education debt can dictate a student’s finances for decades, especially if a student defaults on the loans and damages his or her credit.

Kids may not be thinking about credit and life after college, but parents should step in and fill that knowledge gap, Okun said.

“I really think that parents need to start this conversation right at the kitchen table starting in seventh grade and ask their students what do they think they want to be,” she said. Planning plays a crucial role in financial security, whether that’s executing a strategy to build credit (which you can track using free tools on Credit.com) or goals for achieving milestones like getting a car, buying a home or starting a family. Many experts agree that you can’t start teaching personal finance too early, and that goes hand-in-hand with those “What do you want to be when you grow up?” conversations.