Collegiate Funding Services Survey Finds Parents Unprepared to Pay College Costs.

FREDERICKSBURG, Va. -- Despite High Expectations, 2.7 Million Households Do Not Understand College Education Finance Options

Rising education costs are weighing heavily on parents who want their children to attend college but feel financially unprepared to handle tuition and expenses. According to a national survey by Collegiate Funding Services (Nasdaq:CFSI), 65% of parents expected their children to pursue a college education at a four-year college, yet 44% felt they were not really prepared to pay for that education.

"Parents are beginning to feel that sending their child to college is no longer an option they can afford," said J. Barry Morrow, CEO of Collegiate Funding Services. "In fact, our survey indicated that more than a half a million households feel that the rising cost of tuition would contribute to their decision to forego a four-year college education all together."

Middle class parents -- those with household incomes of between $25,000 and $74,999 -- were notably unready to pay their teenager's college education. Fifty-six percent of this group said they were not prepared, the survey revealed.

The survey also showed that more than one-third of parents, or 2.7 million households, understood very little about the different financial options that exist for parents to help pay for the costs of college. Middle class parents (as defined above) had the least understanding. For example, 43% of middle-income parents said they had little or no understanding of their financial options as compared to 24% percent of parents with household incomes under $25,000 and 29% of parents with household incomes of $75,000 and above.

Perhaps lack of awareness of the many different financial aid resources available to help pay for college is why 16% of parents (or 900,000 households) who will send their children to college plan on dipping into their retirement savings, and 7% (or 400,000 households) plan on using credit cards to finance, or help to finance, their child's college education -- both squarely against the sound advice of many financial experts.

"The dream of attending college seems to be alive and well, but it is distressing to see the growing number of parents who feel that college attendance is unattainable for their sons and daughters. The unfortunate reasons are a widespread misinformation about college cost and the financial aid process, which is prevalent in every community," said Ronald W. Johnson, Director of Financial Aid at UCLA. "School financial aid offices are an excellent source of information, but we need to look for broader avenues of credible communication to make certain that education finance tools and resources get into the hands of every parent and teenager as early as possible to help them make critical higher education finance decisions."

In addition to impacting financing options, the Collegiate Funding Services survey showed that increasing higher education costs are also affecting other enrollment decisions. More than one-third of those surveyed said that the cost of tuition and expenses was the most important factor in choosing a college, not academic reputation; and more than 25% of those whose children will not be attending a four-year college said that the rising cost of tuition contributed to that decision.

These findings may not be surprising when you consider that the average tuition for the 2003-2004 academic year rose by 14% to $4,694 at public colleges and universities, and by 6% to $19,710 at private institutions, according to the College Board's Trends in College Pricing 2003 and Trends in Student Aid 2003. The increases appear to be directly impacting school selection. For example, 75% of parents planning to send their teenagers to an in-state and/or public college said that the cost of tuition was a factor in the teenager's likelihood to attend that type of school.

While rising costs will no doubt continue to impact access to higher education, Mr. Morrow says that it is vital that families know that there is a wide assortment of affordable financing options and resources available to them, and that they should not give up on their college dreams. He encourages parents and students to seek assistance from guidance counselors, college financial aid officers, and to explore the many different options offered by reputable higher education finance companies such as Collegiate Funding Services.

"Collegiate Funding Services is committed to making families aware of the many financing options available to help parents send their kids to college -- from federally-guaranteed Stafford and PLUS loans, to credit-based private education loans," said Mr. Morrow. "At Collegiate Funding Services, we want to help ensure that every student that wants to go to college gets the financial assistance they need to achieve that goal."

For more information on education loans available through Collegiate Funding Services, parents and students can call 1-888-423-7562 or visit www.cfsloans.com.

Methodology

The Collegiate Funding Services 2004 "Planning and Paying for Your Teenager's College Education" Survey was conducted as part of an International Communications Research (ICR) omnibus survey completed through telephone interviews of 502 American parents of children aged 15 to 17 during March and April of 2004. Results are considered accurate within 5.2%.

About Collegiate Funding Services

Collegiate Funding Services is a leading education finance company dedicated to providing students and their families with the practical advice and loan solutions they need to help pay for and manage the cost of higher education. Collegiate Funding Services also offers a comprehensive portfolio of education loan products and services -- including loan origination, loan servicing, and campus-based, scholarship and affinity marketing tools -- to the higher education community. Since 1998, Collegiate Funding Services has facilitated the origination of over $15 billion in education loans, and currently manages $10 billion in student loans for more than 400,000 borrowers.

For additional information, visit www.cfsloans.com or call 1-888-423-7562.

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