One of the largest global education surveys
shows proactive planning and upfront conversations about the costs
of college could ensure better financial outcomes for parents and
students alike
Key Findings:
- The US has the largest funding gap
across all markets surveyed — an average of $82,103 per student
- On average, parents spend $17,314 over
the course of their child’s college degree
- On average, students spend $99,417 over
the course of their college degree
- 85% of students are working in paid
employment while studying, mostly (57%) because they need extra
income
- The majority (59%) of parents worry
they don’t have the financial resources to support their child’s
college education and 48% wish they had started saving earlier
- 62% of parents stopped or reduced their
leisure activities to support their child’s college education
HSBC Bank, one of the world’s largest banking and financial
services organizations, today published a global study on education
trends, parents’ hopes and fears for their children’s education,
and their attitudes and behaviors towards funding. The survey,
entitled, The Value of Education, also explores students’ own
experiences while studying. Key findings indicate that parents in
the US spend, on average, $17,314 over the course of their child’s
college degree. Comparatively, US students spend an average of
$99,417 — 6 times more than parents. As a result, the United States
has the largest student funding gap of all markets surveyed.
Budgeting for a full range of lifestyle and education costs can
be an expensive learning curve for most students. On average,
students spend more money paying back credit cards, personal loans
and student debt ($4,321 over a four year degree) than they do on
academic books ($3,497 over the same time period). The majority of
students rely on extra-curricular jobs to cover these costs.
According to the report, 85% of students participate in paid
employment, largely (53%) because they need the extra money. In an
ironic twist, students spend more time working (4.2 hrs/day) than
they do in lectures, the library or studying at home.
Cash isn’t always the motivating factor for students to get a
job, though. Many (37%) seek employment to enhance their
employability after college. Volunteering is popular among
students, with 66% engaging in some kind of unpaid volunteer work
over the course of their four-year degree.
Sacrifices and spending
Despite good intentions, many parents fail to adequately save
for college, forcing them to make significant personal sacrifices
to meet the costs associated with their child’s education.
According to the report, nearly three quarters of parents (73%)
rely on their day-to-day income to help fund their child’s college
education as opposed to savings or borrowing. Only 23% are funding
from a specific education savings or investment account, which
while low, is actually ahead of the average of all the markets
(20%). For US parents, this means making personal sacrifices to
help cut costs and put more money toward their child’s college
bills. The biggest sacrifice is usually reducing or stopping
leisure activities (62%) followed by taking fewer vacations (47%)
and giving up personal time or hobbies (43%).
Reflecting on past saving habits, almost half (48%) of parents
with a child at college wish they had started saving for their
child’s education earlier and more regularly (40%). Fifty-nine
percent worry that they don’t have the financial resources to
support them. However, despite significant costs and sacrifices
associated with a college education, the majority of parents (71%)
and students (82%) agree it’s a worthwhile investment.
“Although there’s a gap, proactive planning and upfront
conversations about the costs of college could ensure better
financial outcomes for parents and students alike,” said Pablo
Sanchez, Head of HSBC’s US Retail Bank and Wealth Management. “With
the help of a professional, parents and students can better prepare
themselves for this major investment without having to make the
significant personal and financial sacrifices that we’ve seen in
this report.”
The future of skills
Thinking ahead to 2030, parents are less optimistic than
students about the role education plays in preparing their children
for the future of work. Seventy-two percent of college students
believe that their education has prepared them for the world of
2030 and beyond, while only 44% of parents feel the same. Despite
this divide, both parents and students who believe this agree that
in the future, education should focus more on soft skills like
critical thinking (60% and 57%) and problem solving (59% and
46%).
US parents are also divided when it comes to thinking about
impact of artificial intelligence and robots on their children’s
lives. Almost two fifths (38%) remain skeptical and are worried
about the impact it will have on their child’s future career. Only
31% believe that AI and robots will make their child’s life
better.
Practical steps
Here are some practical steps drawn from the research findings,
for parents to consider when planning for their children’s
education:
- Start planning early: Early
planning and saving for education can help your children fulfill
their potential and limit the strain on family finances. Seeking
professional advice can help you plan and make better informed
choices.
- Be realistic about the costs:
The cost of university education for your children can be
expensive. Take into account all the costs when planning how to
financially support them through higher education.
- Instill good financial habits:
Help your children to plan and manage the costs of student life by
taking advantage of the budgeting tools and calculators available
online.
- Invest in a range of skills:
Help your children choose an educational route that will equip them
with the softer skills needed for the workplace of the future as
well as the specific skills for their chosen career.
The research
The Value of Education is an independent consumer research study
into global education trends, commissioned by HSBC. It provides
authoritative insights into parents’ and students’ attitudes and
behavior towards education around the world.
These findings are from the fifth survey in the series and
represent the views of 10,478 parents and 1,507 students in 15
countries and territories: Australia, Canada, Mainland China,
France, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore,
Taiwan, Turkey, United Arab Emirates, United Kingdom, and the
United States.
The findings are based on a sample of parents with at least one
child aged 23 or younger currently (or soon to be) in education,
and on a sample of students aged 18 to 34 in university
undergraduate and postgraduate education, drawn from nationally
representative online panels in each country and territory. The
research was conducted online by Ipsos MORI in March and April
2018.
This press release represents the views of 530 parents and 150
students in the USA.
To view the full Value of Education Study, click here.
Note to editors
HSBC Bank USA, National Association (HSBC Bank USA, N.A.)
serves customers through retail banking and wealth management,
commercial banking, private banking, and global banking and markets
segments. It operates bank branches in: California; Connecticut;
Delaware; Washington, D.C.; Florida; Maryland; New Jersey; New
York; Pennsylvania; Virginia; and Washington. HSBC Bank USA, N.A.
is the principal subsidiary of HSBC USA Inc., a wholly-owned
subsidiary of HSBC North America Holdings Inc. HSBC Bank USA, N.A.
is a Member of FDIC. Investment and brokerage services are provided
through HSBC Securities (USA) Inc., (Member NYSE/FINRA/SIPC) and
insurance products are provided through HSBC Insurance Agency (USA)
Inc.
HSBC Holdings plc, HSBC Holdings plc, the parent company
of the HSBC Group, is headquartered in London. The Group serves
customers worldwide from around 3,800 offices in 66 countries and
territories in Europe, Asia, North and Latin America, and the
Middle East and North Africa. With assets of US$2,607bn at 30 June
2018, HSBC is one of the world’s largest banking and financial
services organisations.
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Media enquiries to:HSBC BankMatt Klein, +1
212-525-4644matt.klein@us.hsbc.comorCarolyn Hamm, +1
212-525-0720carolyn.hamm@us.hsbc.com
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