College Board says the average cost that students born in 2015 who will be attending a 4 year university 18 years from now, will be $261,793. For those planning on attending a four year college, it will be $133,528! Given those numbers, it’s no surprise that parents want to start paying for their child’s tuition even before their child is born. A survey of 2,000 parents with at least one child under 18 years of age from How America Saves for College 2015 says that 9 out of 0 parents expect their child will go to college, and sound the same percentage of parents think of college as an investment for their child’s future. However, how they prepare for it doesn’t exactly match this fact.
Even though a majority of parents say they expect their child to attend college, only 57% of them are actually planning on saving money for when their child does attend college. 43% of parents aren’t creating a plan in order to save for college or actually putting money aside to aid their child’s college tuition in the future.
Families that have a plan to save for their child’s college tuition have saved $11,102 on average which is 46% more than those who do not have a plan. Such families have saved, on average, $7,611.
Many families financial states are not stable, which is the reason behind them not saving for their child’s future college. A two-thirds of families say they are relying on other funds to help aid their child’s college tuition. Surprisingly, these parents are covering more of their child’s tuition than those who are independently saving money, rather than relying on government money.
Between this year and last year, the number of parent saving for their child’s college tuition has not changed, fortunately. There are various methods used to save money for such things, and these methods have promised a bonus on tax returns.
Unfortunately, savings rates have gone down since last year. So although families report to set aside the same percentage of money for savings, the amount of that money has gone down. Only 45% of families have an overall goal for their savings.
Most families are using a savings account to hold their savings which earn a very low rate of interest. Otherwise, another option would be to use a checkings account. In both of these accounts, the money amount can grow. In order of most popular vehicles of saving, savings accounts wins first place, while 529s earn second and checkings accounts are in third place.
In conclusion, one thing that is certain is a majority of parents are more concerned with saving for their child’s education than with the cost of their own living. No matter what method you use to save, there is one thing that will always help out and that is planning.
To quote a reliable report, “Parents with plans have saved 31% more than those without plans, and they are three times more confident that they will be able to meet the cost of college.”