Nearly six in 10 parents are saving for college, one-third saved more this year than last, and the average amount saved — $18,135 — is the highest amount reported in the last five years of “How America Saves for College,” a national study reported.
The survey was from Sallie Mae, Newark and Ipsos, an independent global market research company.
After saving for general needs and emergencies, parents earmark funds for college more than for any other specific purpose, alongside retirement.
Only 10 percent of parents plan to tap their retirement funds for college, down from 20 percent in 2016 — the last time this report was published.
Six in 10 parents (61 percent) contribute a set amount to their college fund on a regular basis. To find more money for college, 30 percent of parents have cut back on discretionary spending, and 27 percent have reduced their household expenses.
This year marks the first time tax-advantaged 529 college savings plans hold the largest share of college savings — 30 percent.
That said, fewer than one-third of parents saving for college are using them (29 percent). Most parents who are not using 529 plans report not being aware of or knowing enough about them, or not having enough money to invest in them.
“This year’s report findings reflect America’s rising consumer confidence levels overall,” said Julia Clark, senior vice president at Ipsos. “The data show that parents are making smarter – and more optimistic – decisions about their plans for education for their children.”
Nearly nine in 10 parents who have a college savings goal (86 percent) are confident they’ll achieve it. The average goal is $55,342, and parents are about one-third of the way toward meeting it, an improvement from 2016, when parents had saved roughly one-fourth of their goal.
On average, parents start saving for college when their child is seven.
Parents who have planned how they’ll pay for college have saved more than twice as much as those without a plan ($22,169 vs. $9,208). They are also three times more likely to be confident they’ll be able to meet the cost of college than those who haven’t planned (73 percent vs. 27 percent.)
“Most parents aspire to give their children the opportunity to attend college, and it is encouraging to see them saving more and employing smart habits, and taking deliberate actions to make college a reality,” said Raymond J. Quinlan, CEO of Sallie Mae. “Our research shows most parents are proactively preparing financially to give their children the advantages of higher education, and having a plan pays off.”
The report and a related infographic are available at SallieMae.com/HowAmericaSaves. Join the conversation on social media with #HowAmericaSaves.
