Parents are rethinking their education spending in a rapidly changing world: less on school supplies and more on tuition, new research finds.
Many parents are a little stressed with the new school year looming, especially those feeling the pinch of continued inflation or fearing an impending recession. Finding room in their budget to invest in their children’s education could be a challenge.
A new survey from personal finance website WalletHub also found that around 66% of parents say the pandemic has changed the way they plan to spend money on their children’s education, especially where they live. think their investment will help their children the most.
“Some families moved for more reliable in-person learning, while others began saving for private school after planning public education, to name a few popular adjustments,” says analyst Delaney Simchuk. WalletHub. “Time will tell how inflation or the next big crisis will further affect pandemic-inspired education investment plans.”
by WalletHub 2022 back-to-school report also revealed other insights into how parents plan to spend money on their children’s education.
Change the direction of their spending
While back-to-school sales and tax holidays may offer some relief, finding extra money to pay for the rising cost of new clothes and school supplies could prove difficult for some families in a budget crisis this year.
Case in point: Only a third of parents who took the survey said they would spend more on back-to-school shopping this year compared to last year. This corresponds to a recent Deloitte study which also found that 37% of parents intend to increase their back-to-school shopping compared to last year.
Meanwhile, some 46% of parents say they would apply for a new credit card to get a discount on school supplies this year.
“Back-to-school shopping expectations are dampened somewhat by inflation concerns, and comparisons to last year are difficult given that most schools have resumed in-person learning on last year and the parents spent accordingly,” says Simchuk.
Is education worth going into debt?
One of the most interesting questions the WalletHub survey asked parents was whether they thought their children’s education was worth the debt. About 70% of parents said yes, which tells us a lot about why we as a country continue to see soaring levels of student debt.
Credit card debt levels have also started to recover after falling in the first year of the pandemic.
“We usually don’t mind spending too much, and when the expense is as big as the education, both in amount and importance, all bets are off,” says Simchuk. “Parents want to help their children as much as possible, and a good education is a sure path to a solid professional career.”
But caution is needed here, says Simchuk. “Parents just shouldn’t forget that they are financial role models and putting themselves in a precarious position could actually jeopardize their children’s future.”
It is also a potential call to action for parents to recognize that living with debt can be stressful for their children, and that there are other avenues for their children to succeed, without going into debt to pay a private primary education or even to cover school fees. In the end, skills matter as much, if not more, than degrees when it comes to landing a great job, alongside “mature” skills that can be bolstered by landing a great internship.
Financial literacy as an essential life skill
While parents say taking on debt to fund a child’s education is a good investment, most (86%) believe financial literacy training should be part of the core curriculum. In general, personal finance today is not widely taught in the classroom, nor are other soft/professional skills that employers value highly.
“Parents want their children to be prepared for life, and budgeting, saving, investing, and even paying taxes are all important and practical life skills,” says Simchuk. “Many parents also recognize the importance of having some financial savvy when making important decisions about higher education.”
This is a great point considering that students should view their education as an investment and how they can expect to generate a positive return not only in terms of salary, but also happiness and work-life balance. Money is only one part of the big picture.
The evolution of the economics of education
Time will tell how changing economic conditions in the coming years will impact how parents think about investing in different aspects of their children’s education. The WalletHub survey offers us some insight into how trends might already be changing in terms of parental spending priority — less on the basics and more on the perceived quality of a degree.
But some things will never change. It’s a safe bet that parents will always pursue the goal of trying to provide their children with the best possible life. In this respect, investing in an excellent education will always be considered invaluable.