Seventy percent of Millennials will be graduating college this year with an average student debt of $35,200. And while rising college costs and the plague of student debt are not exactly news, half of the surveyed 2013 graduates with student loans still say they are surprised by just how much debt they have accumulated, according to a new Fidelity study.
More than one-third of Millennial respondents said a greater understanding of the total cost of college might have impacted how they addressed their college choices and savings strategies, an increase of 14 percentage points from 2011.
“The number of graduates reporting surprise by the level of student debt they have accumulated is a big concern and shows there is a considerable need for families to better understand the total cost of college,” offered Keith Bernhardt, vice president of college planning at Fidelity Investments, in a statement. “It is critically important for families to have thorough discussions related to college planning a lot earlier than they do now and to understand their options and create a college savings and funding plan to help avoid significant post-graduation debt.”
Related story: Saving for college: Families face “substantial savings gap” Click here to read more.
The study found that members of the Classes of 2011, 2012 and 2013 are demonstrating financial accountability for their college choices as well as a desire to take control of their post-graduation financial futures. Eighty-five percent of recent college graduates said they contributed at least some of their own personal savings to their college tuition and college-related expenses. Of these, more than one-fourth (27 percent) contributed more than $10,000, while 81 percent working the summer, school year, or both to help meet college-related expenses.
More than half of recent college graduates said they chose a specific major that would give them the best chance to earn a higher-paying job. The top five majors listed were: Business, Biology, Psychology, Engineering and Accounting/Finance.
In setting financial goals, half of Millennials beginning their post-college adult lives said that their primary financial goal is to pay off their student loan debt (which 54 percent forecast to take almost a decade to pay off. Further, 41 percent are saving to purchase a home and 34 percent are creating a rainy day fund for emergency expenses. More than half (54 percent) report having a financial plan in place to achieve these goals.
What would the Class of 2013 advise college-bound high school students?:
· Start planning sooner: 57 percent of new graduates said they could have saved more or found additional savings by cutting back on eating out, entertainment, and retail spending.
· Understand your potential post-graduation tab: Take time to research financial aid, different kinds of loans, and grants and scholarships.
· Consider future job prospects
· Control your costs
· Save smart: Consider a 529 college savings plan
Related story: Working Millennial college graduates, disillusioned, underemployed. Click here to read more.