Nearly 60% of parents believe they can afford their children’s college tuition, but only 20% are prepared after seeing the bill.

As the fall semester draws closer, the high cost of college is a major pain point for many students and parents.

A recent survey by Citizens Financial Group, a bank holding company, shows that 59% of parents were confident they could afford tuition when their children were accepted. However, the percentage who felt prepared after receiving the astronomical bill plummeted to 21%, creating a significant “confidence gap.”

Chris Ebeling, director of student loans at Citizens Financial, explained that while tuition continues to rise, federal loans, grants, and aid haven’t kept pace. Parents feel they can afford college, but once they see the bill, the number of parents who share this confidence drops significantly.

The survey, conducted in April and May, surveyed over 1,000 parents nationwide whose children, aged 13 to 29, plan to attend or have already attended college. A separate report from J.P. Morgan Asset Management states that tuition costs nationwide have risen an average of 5.6% annually since 1983, outpacing inflation and other household expenses.

Annual tuition at more universities is exceeding the $100,000 mark, and continues to rise by approximately 5% annually.

According to a report by student loan agency Sallie Mae, by the 2024-25 academic year, the average cost of higher education for American families will be nearly $31,000, an increase of nearly 10% from the previous year.

Most parents’ income and savings cover about half of the cost, while scholarships and grants cover more than a quarter, with student loans accounting for the majority of the remainder.

Scholarships are a significant source of funding, but Sallie Mae reports that only about 60% of families use them, averaging about $8,000.

Sallie Mae spokesman Rick Castellano said only 71% of families submitted the Free Application for Federal Student Aid (FAFSA), down from 74% in the previous academic year. This application allows for federal loans, work-study, and grants.

Furthermore, while 529 college savings plans are tax-advantaged and a valuable tool for college funding, less than a third of families use them, and understanding of 529 plans is widespread.

Recent data from Credit Karma is even more concerning: less than a quarter of parents surveyed have opened 529 accounts for their children, and 43% said they had never heard of them. Approximately 18% of parents surveyed were unaware that 529 accounts can be used for more than just college tuition and therefore do not use them.