As incoming college freshmen prepare to turn in their acceptance letters on May 1, a new study finds 45 % of Texas teens surveyed indicate they have changed their college plans because of the economy. This is among the key findings in the Houston-area administered 2010 Junior Achievement/Allstate Foundation "Teens and Personal Finance" Survey.
Included within the 45 percent whose college plans have changed:
• 16 percent are working more to pay for college
• 14 percent are staying closer to home or are not attending college out of state
• 9 percent plan on going to a community college
• 4 percent may delay school for one year or longer
• 2 percent are not planning to go to college
Economic pressures and steadily increasing tuition are forcing teens and their families to exercise financial discipline to pay college costs. A majority of the teens—55 percent—report they and their families are saving for college, with 20 percent of those teens saving their own money and 35 percent reporting their parents are saving for their college educations. However, nearly one-in-five (17 percent) haven't determined how they will pay for college.
Interestingly, 44 percent of the teens say they plan on getting college scholarships. Yet, 66 percent of all U.S. undergraduates received some type of financial aid in 2007–08, including grants, loans and scholarships, according to the U.S. Department of Education. Those who miss out on financial aid opportunities will be left with tough financial decisions to make.
Of those students nationwide who do receive some type of financial aid, U.S. Department of Education data show that the median amount of student-loan debt carried by 2007-08 bachelor's degree recipients at public four-year colleges was $17,700 and $22,375 at private four-year institutions.
This debt level has taken its toll on students' ability to repay their loans, as evidenced in the rise of student-loan default rates. The latest data from the U.S. Department of Education show that default rates are up from 5.2 percent in 2006 to 6.7 percent in 2007.
Considering that nearly seven percent of college graduates across the country default on their student loans, it is imperative that teens weigh their ability to service their student loans when making college and career choices—equally important are solid financial planning.
"Junior Achievement aims to provide students with a strong set of money-management skills, so they can effectively budget, use credit, and save," noted Rick Franke, president of Junior Achievement of Southeast Texas. "Since April is Financial Literacy Month, it is a great time to reinforce the importance of those skills."
Junior Achievement and The Allstate Foundation have partnered to create Junior Achievement, $ave USA, a financial literacy initiative comprised of free, downloadable money management exercises for parents and their children to do together.
This report presents the findings of a telephone survey conducted among a national sample of 1,000 teens comprising 500 males and 500 females 12 to 17 years of age, living in private households in the continental United States. Interviewing for this TEEN CARAVAN® Survey was completed during the period February 11- 15, 2010. The survey's margin of error is +/- 3.2 percent.
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