How well are you and your family saving for your student’s college education? The average family, according to a recent Fidelity Investments survey, is on track to meet only 34% of their college savings goals. That’s certainly not where many families would prefer to be, especially given that sixty-one percent of parents report they have a financial plan in place to help them reach their college savings goals.
The Fidelity Investments College Savings Indicator, released last week, reveals the above, as well as much more about the state of college savings. It confirms a lot of interesting information about the state of family savings for college, as well as adding some counterintuitive statistical findings.
- An all-time high 69% of families have started saving for college, and on average, put aside $5,000 last year.
- Seventy-eight percent of parents don’t want to burden their children with hefty student loans, yet 43 percent of those planning to take out loans do not believe they will be able to secure one to cover the full amount needed to pay their children’s college bill.
- Thirty-three percent of families report they are investing in a 529 college savings account, an increase from 28% last year (2012) and 18% five years ago (2008).
- More than three-quarters (78%) of parents agree that despite recent market volatility 529 plans are still an effective way to save for college.
- Parents plan to pay the following for their student’s college education:
- 26% of the parents surveyed plan to pay all costs
- 69% plan to pay a portion
- 4% will not pay for any of their children’s college costs
Much of the survey is focused on how college costs are prompting significant worries in families of college-bound students. 74% of families believe the cost of college is becoming cost prohibitive, while 55% are concerned their children will have to make compromises in the quality of their education due to cost. College costs are also shifting decision-making, as families find ways to limit undergraduate costs. Among the techniques to limit college costs, living at home, considering a state college, online classes and graduating early are considered by a significant number of families. Many parents are also going to ask or already have asked students to save for their own college, ask students to take a job during school, or require a minimum GPA from their student (3.1, on average) in exchange for help with college funding.
To accompany the full study, Fidelity Investments included a family Conversation Checklist on the topic of college savings. It’s a really good starting point for families that know that some tough funding decisions may lie ahead. That checklist is available here.
Lastly, Fidelity’s College Savings Indicator 2013 comes with a helpful infographic on the effect of family conversations about college savings with students, which you can see below.