Latino parents are vehemently against their children obtaining student loans, preferring nine other methods to help pay for college before relying on loans, according to a new study commissioned by Massachusetts Mutual Life Insurance Company (MassMutual).
The MassMutual study found that scholarships (43 percent), federal student aid (40 percent), parent savings (36 percent), and starting at a less expensive two-year college (31 percent) were the most preferred methods.
Following the aforementioned options at the top of the list, borrowing funds from a retirement account, a 529 plan, a part-time job for their child, work-study programs, and parents borrowing were all deemed by the respondents as more favorable than student loans.
The study also found that Latinos saved nearly the least of any ethnic group surveyed. However, Latinos were one of the most optimistic ethnic groups in regards to college affordability.
MassMutual hypothesized that Latinos were most optimistic because of their higher awareness to the various methods that can be used to pay for college. The insurance company also cited their cultural beliefs that college does not always have to happen on a standard four-year plan or only at one institution.
Built into the optimism amongst Latinos may be a deep cultural faith that everything will work itself out.
“For Latino parents, the financial security that comes from having a college education is a key factor in their level of confidence in a child’s future happiness and having an open door to opportunities they or their parents did not have,” said David Hufnagel, Latino market director, MassMutual. “College represents a way to better the family’s financial future, parallel to the collective family-oriented behaviors of Latinos.”
The MassMutual College Planning and Saving study looked at the attitudes, behaviors, and needs of families related to planning for and funding higher education. The study sought to provide a more detailed understanding of the value placed on education and how ethnicity plays into related decisions.
MassMutual offered three tips to help Latino families plan and save for college. First, Latinos should “dream with a plan,” meaning they should estimate how much college will cost and what needs to be done to meet that cost. Second, Latinos should start saving as early as possible and make saving easier by using tools like automatic payroll deductions. Third, MassMutual encourages Latinos to consider all options when figuring out how they will afford college.
“We’re here to help educate Latino parents about options for their families, and then help them make their financial goals a reality,” concluded Hufnagel.
MassMutual, a leading mutual life insurance company, had New American Dimensions, LLC conduct the study in December 2016. Research, qualitative and quantitative, was done with men and women ages 30 to 64 with children ages 5 to 15, with whom they are financially responsible. Respondents had to have a minimum household income of $50,000 and also participate in financial decision-making for their household.
Author: Mike Brown
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