Teens are relying more on scholarships, grants and their own savings with rising college tuition costs.

With two-thirds of teens expecting to go to college at some point, many parents better get saving — or maybe not?

Most teens aren’t banking on their parents making their education possible, according to a national survey by TD Ameritrade. Due to a fear of failing to pay for tuition, 63 percent of high school students are starting to save for their own education.

At the same time, 35 percent are looking at a gap year — a year off before college that can be devoted to traveling, saving for school, and considering their options.

“It’s fantastic to see a majority of college-bound teens saving for the related expenses,” says Carrie Braxdale, head of investor services at TD Ameritrade. “Clearly, teens understand the escalating costs of college and aren’t expecting their parents to foot the entire bill.”

Money in the bank

Of those teens building up their bank accounts, one third (32 percent) have over $1,000 in their account while 10 percent have over $5,000 saved. But student savings are just the start…

  • 49 percent say that they will pay their tuition with scholarships or other grants
  • 42 percent say they will work part time in college
  • 33 percent say they will receive government aid, while 32 percent will take out loans

Of the above methods, public loans may see a drop in usage due to an upcoming interest rate increase. According to the Education Department, the rates for Direct Subsidized loans will go up from 3.76 percent to 4.45 percent (an 18.4 percent increase) on July 1, 2017.

Besides the previously mentioned gap year, students are also looking at other educational options. The survey shows 30 percent are looking at going to community college, despite the fact enrollment is down to 5.7 million people last year from 6.3 million in 2013, according to the American Association of Community Colleges.

Whose bill is it?

Despite their efforts, all of the pay won’t come from their savings. According to the study, 56 percent of teens expect their parents to pay for some or all of their tuition, compared to 51 percent from their own savings.

On the flipside, teens expect their parents to carry the weight when it comes to paying for their textbooks (65 percent), other living expenses (65 percent) and room and board (48 percent). When it comes to location, suburban-raised kids are 6-10 percent more likely to rely on their parents than city-raised kids.

Of course, before parents have their hard-earned cash spent, they need to have a talk with their soon-to-be college student. Only 33 percent have talked about who will pay the costs, while 44 have discussed some details but not all the costs, and 19 percent have not talked at all.

“With so many teens expecting to attend college, it’s more important than ever for families to have open conversations about what those plans will cost,” Braxdale says. “It’s an opportunity to put all the cards on the table to set expectations on who’s paying for what.”

And the sooner you start, the more successful a plan you can make. That’s the key to avoiding student loan debt you won’t be able to pay off for 10 years.

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Meet the Author

Ryan Lynch

Ryan Lynch


Lynch is a freelance writer for Debt.com.

College, Family

college savings, millennials, parents, student loans

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Article last modified on June 27, 2017 Published by Debt.com, LLC . Mobile users may also access the AMP Version: Students Relying Less on Parents to Pay for College - AMP.