RICHMOND, VA (Tuesday, Sept. 11, 2018) –According to the 2018 Allianz Tuition Insurance College Confidence Index, roughly 40 percent of families find the Free Application for Federal Student Aid (FAFSA) challenging to complete – a troubling statistic considering the growing number of families saving nothing for college. The index reveals a growing “college savings gap,” as even parents who have saved have only about a third of what they think a four-year degree will cost. Both groups expect to tap outside sources (including those accessible after filing the FAFSA.) to cover 40 percent of the balance, a significant increase from 2017.
The index also shows that parents who seek help with FAFSA and other financing questions place the most trust in a college’s financial aid officer or their own financial advisors, while students turn equally to family members and financial aid officers.
Allianz Tuition Insurance surveyed 1,000 current and prospective students and 1,000 parents on perceptions and actions linked to college preparedness and overall confidence. Most parents surveyed (71 percent) felt confident in their ability to pay for their children’s college education, though the 2018 data revealed several areas in which families seem to fall behind. This also pointed to opportunities for financial professionals to offer more hands-on guidance.
Families struggle to complete the FAFSA application. Thirty-seven percent of parents and 41 percent of students found the FAFSA process confusing. Of those parents who sought FAFSA support, 25 percent went to college financial aid officers, and 57 percent of students consulted their parents. However, more than 40 percent of parents and 31 percent of students did not seek advice about planning for college costs.
Financial aid officers are the top information source for families planning to pay for college. Parents who requested guidance trust financial aid officers (88 percent) and financial advisors/planners (86 percent) over family members. Further, 85 percent of students place equal trust in family members and financial aid officers.
The College Savings Gap is growing. Many parents (44 percent) and prospective students (45 percent) haven’t put aside any money to finance higher education. Overall, parents saved an average of $12,937 (down 12 percent from $14,690) and students saved an average of $7,800 (up 17 percent from $6,678). However, families expect a four-year program will cost more than $61,000.
“This year’s College Confidence Index draws a clearer picture of how many people overlook opportunities to manage one of the most important investments of their lives,” said Daniel Durazo, Marketing and Communications Director at Allianz Global Assistance. “The data indicates financial aid officers at higher education institutions are an important ally for families, especially for those without access to financial advisors. A college financial aid officer can serve a critical role, helping families navigate costs, financing, and, in many situations, options for protecting their investment such as tuition insurance.”
Methodology: These are some of the findings of an Ipsos poll conducted on behalf of Allianz Global Assistance in April 2018. For the survey, a sample of n=2,000 Americans (college students age 17-25, prospective n=500, current, n=500; and parents of prospective students 17-25, n=500, and of current students n= 500) were interviewed online via Ipsos’s I-Say panel. Quotas and weighting (by gender and region) were employed to ensure that the sample’s composition reflects the overall population according to census information. The precision of Ipsos online surveys is measured using a Bayesian credibility interval. In this case, with a sample of this size, the results are considered accurate to within ± 2.5 percentage points, 19 times out of 20, of what they would have been had all parents and students in America been polled. The credibility intervals are wider among subsets of the population.
Allianz Global Assistance USA (AGA Service Company) is a leading consumer specialty insurance and assistance company. We provide insurance to over 25 million customers annually and are best known for our Allianz Travel Insurance plans. In addition to travel insurance, Allianz Global Assistance USA offers tuition insurance, event ticket protection, registration protection for endurance events and unique travel assistance services such as international medical assistance and concierge services. The company also serves as an outsource provider for in-bound call center services and claims administration for property and casualty insurers and credit card companies.[ssba]