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3 uncomfortable truths about college saving

Allen Wastler

Posted on August 28, 2023

Allen Wastler is a former financial journalist with over 30-years of experience, including time at CNBC, CNN, and Knight-Ridder Newspapers.
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Point out that college costs often outstrip what the typical family may have saved.

Note that the odds tend to run against scholarships.

List the typical student debt loads encountered after college.

For many parents, giving their children a college education is a priority. After all, a college degree often means better income and a better standard of living in the years ahead.

Unfortunately, there are some uncomfortable truths about securing a college education that families are sometimes reluctant to face.

But, while those facts can be challenging, they can be overcome with the proper planning and knowledge. The first step in finding those solutions is understanding what the realities are.

Cost vs. savings: A mismatch

How much a college education costs often well-outstrips how much the typical family saves for it.

Here’s a look at full-time average college tuition, including room and board, across the nation for the 2022–2023 school year from the College Board:

  • Public four-year in-state: $22,250.
  • Public four-year out-of-state: $40,550.
  • Public two-year in-district: $13,470.
  • Private nonprofit four-year: $53,430.

Unfortunately, many families haven’t saved enough to cover a good portion of those costs for a year, much less four years.

Most college savings are in 529 college savings plans, according to Sallie Mae. However, the average 529 plan balance stood at $25,630 as of December 31, 2022, according to the College Savings Plans Network.

Given that savings often fall short of the total college bill, many families look for other sources of funding.

Scholarships fall short

Think a scholarship might be in the offering? The uncomfortable truth is that might be less of a possibility than you think.

Only about 1 in 8 college students wins an academic scholarship, according to an analysis by the research outfit, using 2016 government data. The average amount received is about $4,200 a year. (Related: How to secure a scholarship)

Very few students get $25,000 or more in scholarships each year (only about 0.1 percent). Among the students who win scholarships, 97 percent win $2,500 or less.

How about an athletic scholarship? Fewer than 2 percent of high school athletes receive some sort of scholarship to compete in college, according to the NCAA. (Related: The college athletic scholarship challenge)

Debt load for graduation

Because of the hard financial realities above, many college graduates incur a significant debt load along with their degree.

Indeed, according to one analysis using 2021 government data:

  • 54 percent of college graduates had some type of student loan debt.
  • The average debt load was $29,100.
  • 53 percent of graduates from public colleges had loans (average debt of $27,400).
  • 55 percent of graduates from private, nonprofit colleges had loans (average debt of $33,000)

Such loans can become a serious or even unmanageable burden, especially for those just starting out in careers and life. (Related: Seeking relief when student loans are unaffordable)

“Failure to repay student loans can have serious financial consequences for borrowers, including collection fees; wage garnishment; money being withheld from income tax refunds, Social Security, and other federal payments; damage to credit scores; and even ineligibility for other aid programs, such as help with homeownership,” The Pew Charitable Trusts noted in a 2020 analysis of student loan debt. “These outcomes can also adversely affect a family’s financial security.”

Realities, not barriers

None of these uncomfortable truths about college financing is insurmountable. There are ways that college savings can get a boost and debt loads can be managed. (Learn more: 6 ways to cut college costs in half)

Understanding how can sometimes take knowledge and guidance. That’s where many people turn to a financial professional for help. (Need a financial professional? Find one here)

Discover more from MassMutual …

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9 ways to save on college...without a scholarship


The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.