I frequently find myself in conversations with parents who believe they have little to no obligation to pay the entire cost of college for their children.
I’m not talking about people who are just getting by financially and can barely pay for basic needs. I hear this from parents who could save if they started early enough, but they decide it’s not their responsibility to fully fund their child’s education.
Fidelity Investments recently released its latest College Savings Indicator study, and it confirmed what I've been hearing anecdotally: Only 29 percent of parents plan to cover the full cost of college, down from 43 percent in 2016 and 35 percent in 2015.
Parents who are not planning to cover the full cost say they expect their children to contribute 50 percent, up from 30 percent in 2016. By the way, at the same time parents are expecting their children to contribute a substantial amount for their college education, they aren't telling them about this plan, according to the survey.
My question to these parents: How exactly are your children, who haven't held down full-time jobs because they were too young most of their lives, going to come up with the money you expect them to pay?
Oh, yes, scholarships. As I wrote recently, that’s a pipe dream for many people. Based on the 2015-2016 National Postsecondary Student Aid Study (NPSAS), the most recent data available, only 0.2 percent of students received $25,000 or more in scholarship money. Only 2.3 percent of students in bachelor’s degree programs received athletic scholarships, with an average of $11,914 each.
Maybe you're thinking they can just borrow the money?
"They should have skin in the game," one parent told me.
That skin will stretch and stress your child for decades. Already, outstanding student loans have reached $1.53 trillion dollars, according to the Federal Reserve.
For those parents who want to pay, Fidelity found they plan to cover an average of 62 percent of the total cost of college.
But here's the reality check. The parents are on track to cover a median of only 28 percent of their goal.
So how can your child fill the gap between your expectations and what he or she can realistically contribute?
Modern States Education Alliance, a New York City-based nonprofit organization, has a solution — and is paying for it.
The nonprofit group was founded and funded by Steve Klinsky, chief executive of the private-equity firm New Mountain Capital. It offers tuition-free online courses for people to study for College Level Examination Program (CLEP) tests and Advanced Placement (AP) exams, both offered through the College Board.
Since it launched just over a year ago, 92,000 learners have registered on ModernStates.org to take courses designed by top educators.
“Because they’re available on demand, they provide flexibility that is particularly important to working students, service members, and others who are balancing education with other commitments,” said Emily Paulsen, executive director of the College Board’s CLEP Program. “Students of all ages and backgrounds have an opportunity to save on tuition and get a jump-start on their college degrees.”
Modern States also provides free online textbooks and materials for their courses. And if that weren't enough, Klinsky has committed to covering CLEP and AP exam fees for at least 10,000 test takers.
So far, everyone who has completed a course with Modern States opted for a CLEP class, and 77 percent of them got high enough scores on their exams to earn one or more college credits, according to David Vise, executive director of Modern States.
"This is a great way for parents to shift responsibility for earning college credits to their kids," Vise said.
The fewer classes that students have to take in college, the less they pay in tuition — and that’s real savings in time and money. About 40 students have completed their entire freshman year free through the program, Vise said.
Consider this from the College Board: By using CLEP in lieu of just one three-credit course at a public four-year institution, a student would save about $941 in tuition, in addition to savings on textbooks and other fees. If a student earns 15 credits through CLEP, that’s a savings of $4,705. In 2017-18, students who earned passing CLEP scores received an estimated total of more than $154 million worth of college credits.
So if you’re looking for your children to contribute toward their education, Modern States is a realistic way for them to reduce their college costs. That’s skin in the game that won’t leave them struggling with debt.