WASHINGTON -- Concerned about of the burden of student debt, more parents are making saving a priority this year over last year as the best way to pay for their children's college education, the eighth annual State of College Savings survey finds.
Parents ages 21 to 30 and 31 to 35 are getting a jump on the high cost of college by saving earlier in their children's lives.
Fully 71% of parents who responded to the survey said that increased public awareness of student loan debt had caused them to look at different strategies for funding their child's education. Overall, saving is a top method for 45% of parents, up from 43% last year and topping loans/borrowing at 15%, grants/scholarships/direct aid at 30%, and current income at 7%.
The findings paint the picture of a changing landscape with an emerging generation of savers and a broader perspective among all parents of where -- and whether -- their children will go for higher education. Parents are reimagining what higher education looks like: 42% think about vocational and career schools in the same way that they think about public or private colleges. That is double the 21% of high school students who think that way, as discovered by the College Savings Foundation’s recent How Youth Plan to Fund College survey in May of high school students.
The survey of parents found that as many as 18% of their children had considered not going to college, with more than a third of students feeling they could achieve their career choice without it, and others balking at their parents spending that much money or their taking on student debt. Nonetheless, 82% of parents said that it was very important that their children be able to attend college if they want to.
Toward that goal, 51% of all parents have begun saving, the second-highest level in eight years behind 55% in 2013. Some 46% have saved more than $5,000 per child, second only to last year's 53%, and 55% had started saving early -- between the time their child was born through five years of age. And, 24% are saving more for college than a year ago, up from 15% last year.
Parents are confident they will reach their college savings goals (41%, up from 35% last year). Moreover, younger parents are exhibiting these savings habits. This year's survey included significantly more millennials aged 21 to 30 (21%, up from 7% in 2013) and 31- to 35-year-olds (26%, up from 16%); and 44% of all savers came from these two groups. They also made up 52% of those parents for whom saving was the top method of funding college.
Other strategies to funding college:
- 33% of all parents have set up a 529 plan, and 25% said that a 529 is their primary savings vehicle, higher than any other savings category.
- 74% of parents expect their children to contribute to college, and nearly half of those expect them to get a job.
- 55% would ask friends or family for a college savings gift rather than nonmonetary gift.
Published by The Business Journal, Youngstown, Ohio.
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