Ed. Note: This article first appeared in CNBC
Turning 18 means adulthood to many Americans, but largely it doesn’t mean financial independence.
According to data from Sallie Mae and The Knot, parents are stepping in to pay for large portions of their children’s tuition and wedding costs, even if the millennials themselves don’t want to admit they’re cashing checks from mom and dad.
The average total amount parents contributed to their children’s college tuition in 2015-2016 was $27,468.
College Board reports that, at that time, “the average published in-state tuition and fee price for full-time undergraduates enrolled at public master’s universities is $8,225, compared to $10,354 at public doctoral universities.”
As costs keep going up, it becomes more daunting for students to pay either part or all their own way, and some parents are tapping into their savings or taking out loans themselves to ease the burden on their children.
Sallie Mae’s data shows that five percent of American parents even dipped into their retirement funds to help pay for their kids’ tuition. 23 percent of students had their parents cover their student contribution portion of their tuition.
Parents remain the second largest source of funding for tuition after grants and scholarships.
The next generation of millennial parents are learning from their personal experiences with paying for college.
According to a seperate survey done by Sallie Mae and Ipsos, about 66 percent of millennial parents are already saving for their children’s college tuition. Their methods include a savings goal, 529 plan or both.
College isn’t the last time parents get involved with grown children’s finances, either. They also step up when it’s time to pay for their kids’ weddings.
According to The Knot, the average wedding in the U.S. costs approximately $33,000, but there’s tremendous regional variation. In New York, for example, weddings cost an average of $82,000.
The average parental contribution to a wedding is around 56% of the cost. The happy couple pays for the rest of the cost.
That’s easier for some, since millennials are getting hitched later in life and many of them make it a goal to achieve financial stability first. Still, 67% of older millennials have less than $1,000 in their savings accounts.
So even though millennials are, overall, marrying later, affording the wedding on their own is difficult. Parental contributions and paying on credit are still some of the ways young couples cover the costs.
Raising a child in America is more expensive than ever. And, it turns out, a parent’s responsibilities don’t stop after the kid turns 18.
Posted by: The Trust Advisor