Families Going Into Debt for Back-to-School Supplies Jumps by Double Digits

Newsweek

2 days ago

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Forty-four percent of parents plan to incur debt to cover school supplies—a 10-percentage-point increase from 2024—a new survey by Intuit Credit Karma found.
Parents cited concerns over new tariffs as major sources of financial strain ahead of the new academic year, marking a double-digit increase in households going into debt compared to 2024.
Why It Matters
Back-to-school shopping is traditionally a significant annual expense, but this year's costs have become more burdensome for U.S. parents.
The rise comes amid heightened inflation and looming tariff increases, which have contributed to sharp price hikes for school essentials and prompted families to alter spending habits and cut back on necessities.
The trend reflects deeper economic challenges as families grapple with higher living costs, stagnant wages and policy changes. It also signals that inflation and tariff policies can have a direct impact on American households, especially those with children in school.
Teacher Liza Gleason shops for back-to-school supplies at a Target store on August 13, 2008, in Daly City, California.
Teacher Liza Gleason shops for back-to-school supplies at a Target store on August 13, 2008, in Daly City, California.What To Know
This year, 39 percent of Intuit Credit Karma's surveyed parents with school-age children said they cannot afford back-to-school shopping—an increase from 31 percent the previous year.
Other surveys confirm the cost pressure, with one Bankrate report noting that about 20 percent of parents feel budget strain from school shopping.
Key school supplies, including backpacks, cost significantly more this year, with parents attributing price increases to inflation and President Donald Trump's new tariffs.
"Tariffs on imports have driven up the cost of back-to-school essentials like book bags, clothes and supplies," Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. "While apparel prices are down slightly—about 0.5 percent over the past 12 months—that's being completely offset by rising prices in other categories."
While the full impact of the tariffs has not yet been felt, concerns remain that prices could rise further after the August 1 deadline, when tariffs as high as 50 percent will hit several countries.
Retail industry experts confirmed that families are responding by shopping earlier than in previous years, seeking discounts and alternative brands to manage costs.
To manage back-to-school expenses, parents reported employing various savings strategies in the Intuit Credit Karma survey: 73 percent are comparison shopping, 69 percent are buying from discount stores, 44 percent are relying on buy now, pay later services, and 41 percent are choosing hand-me-downs.
More than half of parents (54 percent) are sacrificing necessities such as groceries to ensure their children have needed school supplies. Additionally, 61 percent are using back-to-school sales to purchase holiday gifts simultaneously.
More than half of parents, particularly those with multiple children, said back-to-school shopping is a major source of anxiety. High living costs prompt parents not only to take on debt but also to forgo after-school activities, with 45 percent unable to afford extracurricular programs this year, forcing some to consider cutting work hours or leaving jobs.
What People Are Saying
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: "It's incredibly concerning. Credit card debt in general has seen fresh highs in the years following the pandemic, as inflationary pressures and stagnant wage growth have caused many Americans to look to consumer debt to fill the gaps.
"Typically, for back-to-school season, this isn't as much of a problem, as retail runs aggressive sales and some states offer tax-free shopping on back-to-school items to help parents prepare their children for the year ahead. The fact that there's a share rise in debt usage speaks to just how financially fragile many consumers are at the moment."
Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek: "This rise in the cost of goods hasn't been good for the average family. When you can't walk out of a grocery store without a receipt showing three digits before the decimal, that's a real issue. Sure, we're seeing some disinflation in categories like meat and other staples, but prices aren't coming down."
Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek: "Inflation has hit American families hard, and back-to-school shopping is only getting more expensive. Electronics like powerful calculators and handhelds, items that were once luxuries, are now required technology. But we also have a spending problem. Parents do not want their children to be the ones without, so they succumb to fad purchases on top of the necessities."
What Happens Next
Consumers are bracing for a potential price hike if Trump's paused tariffs take full effect on August 1.
"My advice to parents struggling with how to keep up with demanding school lists and social media fads is to start with the necessities, then move to the fad purchases one at a time," Powers said. "Does your kid need yet another water bottle, backpack, zipper pull and full wardrobe all at once? No. Buy slowly as your budget allows."
Retail analysts anticipate additional increases in school supply costs should tariffs proceed, intensifying the strain on families.
"Long term, this is going to continue ripping through lower- and middle-income households," Thompson said, "and by the time upper-middle and higher-income families start to really feel it, it may already be too late."