Paying for College: Students are saving more and parents less, and both worry about family emergencies that could lead to withdrawal

PR Newswire

RICHMOND, Va., June 27, 2018 /PRNewswire/ -- Prospective and current college students are ramping up their college savings this year while parents' savings are on the decline. Further, while students and parents agree that they worry most about a family emergency causing a student to withdraw, students were far more likely than parents to be concerned about an unexpected change in finances as the cause of the emergency. At the same time, parents are less confident than just a year ago in their children's ability to finish college without needing to withdraw at least temporarily.

The 2018 Allianz Tuition Insurance College Confidence Index released today surveyed 1,000 current and prospective students and 1,000 parents on perceptions and actions linked to college preparedness.

This year's data shows areas in which the two groups differed:

While the average dollar amount saved by parents was nearly double that of prospective students ($12,938 for parents, $7,801 for students), the amount students are saving grew by 17 percent (from $6,678 in 2017 to $7,801 in 2018) – as parents' savings declined by 12 percent (from $14,690 to $12,938). Four in ten students and parents have saved nothing for college.
Students believed they would pay for college equally with their parents (30 percent each, with the balance from other sources); however, parents said they'd contribute nearly twice as much as their kids (40 percent to students' 23 percent).
Both groups considerably underestimated the cost of college, but students were slightly farther off the mark, with students estimating the cost at $15,200 compared to their parents who estimated $15,733. The average tuition, fees, room and board charges are $20,770 for in-state students at public universities according to the College Board.

Parents and students did agree in one area: confidence in the student's ability to finish college without withdrawing. Parents showed a significant decrease from last year with only 51 percent of parents surveyed very confident in their children's ability to finish college without permanently withdrawing, down from 57 percent. Students continue to worry about their ability to finish school with only 54 percent 'very confident' about finishing, slightly up from last year's 52 percent.

Though both parents and students overwhelmingly agreed "family emergency" is the top cause of potential withdrawal from college (82 percent and 93 percent, respectively) there are considerable differences in perception of the impact of specific events:

"Unexpected change in finances" was cited by 76 percent of students, but only 57 percent of parents;
"Mental health condition of a student" by 68 percent of students but 42 percent of parents; and
"Death of a parent" by 64 percent students, 44 percent of parents.

"Uncertainty is a dominant theme surrounding all aspects of preparing for, financing and completing college, but clearly parents and students have differing issues of greatest concern," said Dan Durazo, Marketing and Communications Director at Allianz Global Assistance. "The results of this year's College Confidence Index signal that colleges and universities, financial advisors and related services, such as tuition protection, could play a more prominent role in helping remove some of the financial worries about college tuition so students can focus on their education."

To learn more about Allianz Tuition Insurance, visit www.AllianzTuitionInsurance.com.

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
Allianz Global Assistance USA (AGA Service Company) is a leading consumer specialty insurance and assistance company. We serve 35 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.

Allianz Tuition Insurance* protects both in-state and out-of-state non-refundable college tuition in the event that a student withdraws from school for reasons that include covered illness, injury or psychological/mental disorders. One insurance plan will even provide coverage for almost any unforeseen reason that may cause a student to leave school. Tuition Insurance must be purchased prior to the first day of the semester and three different plans are available, starting at only $29.95 per term. The insurance also includes Allianz Global Assistance's proprietary Student Life Assistance, a 24/7 service that assists families in the event of an emergency.

*Terms, conditions, and exclusions apply. All plans not available in all states. Coverage and limits vary by plan selected. Depending on plan selected, withdrawal due to psychological/mental health disorders may be covered up to between 80%-100% of covered loss, subject to plan's maximum coverage limit. For plans that include Unforeseen Reason coverage, withdrawals under this coverage may be covered up to 50% of covered loss, subject to plan's maximum coverage limit. For a complete description of the coverage and specific benefit limits offered under your plan, carefully review your declarations page and insurance policy. Plans are only available to U.S. residents. Insurance coverage is underwritten by Jefferson Insurance Company (NY, Administrative Office: Richmond, VA), rated "A+" (Superior) by A.M. Best Co., under Jefferson Form No. 107-P series. Allianz Global Assistance and Allianz Tuition Insurance are brands of AGA Service Company. AGA Service Company is the licensed producer and administrator of this plan and an affiliate of Jefferson Insurance Company. The insured shall not receive any special benefit or advantage because of the affiliation between AGA Service Company and Jefferson Insurance Company. Non-insurance benefits/ products are provided and serviced by AGA Service Company. Consumer may be responsible for charges incurred from outside vendors for assistance or concierge services.