College is one of those big-ticket items many parents worry about affording. Luckily, the time from birth to high school graduation gives parents nearly two decades to save.
But how is the average parent saving up for the cost of college?
Sallie Mae, a student loan company, and Ipsos, a global market research company, recently conducted a survey titled How America Saves for College. They surveyed just over 2,000 parents from across the country. Their findings show many parents are on a good path to ensuring their kids can attend college.
About six out of 10 parents surveyed are currently saving for their kids’ college education. Eighty-six percent of those with a specific savings goal feel confident they’ll meet the goal before their child sets foot on campus.
Making a Plan
The survey found the average savings goal to be $55,342. Parents surveyed had already banked an average of $18,135 — nearly a third of that goal.
Parents use a variety of savings vehicles — saving accounts, 529 plans, investment accounts, checking accounts and more — to save up for college. The most popular way to save is with a general savings account; 45% of parents do so. However, parents tend to save more money in a 529 plan — a tax-advantaged plan to encourage saving for college — than in a general savings account.
Six out of 10 parents make regular contributions to their kids’ college savings. The survey found that parents with a specific savings plan in mind have saved more than twice as much as those who aren’t planners.
Finding the Funds
Increasing income and decreasing spending are two ways some parents are finding the money to sock away for their kids’ higher-education plans. About 30% of parents surveyed said they choose to spend less on household and personal items. About 25% are working more hours to boost their income.
Fewer parents intend to dip into their retirement savings to afford college. Only 10% of parents surveyed said they planned to use retirement savings to fund college, compared with 20% who said the same in 2016.
For more insights on how parents are saving for their children’s college educations, see the full report here.
Nicole Dow is a staff writer at The Penny Hoarder. She needs to start saving up for her daughter’s future.
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