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College Savings Surveys

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Several companies have conducted studies of the college saving habits of parents with children under age 18. The studies tend to have small sample sizes ranging from 500 to 1,000 parents. The following are among the more common findings from these surveys:

  • Two-thirds to three-quarters of families say that they are currently saving for their children's college education.
  • Of families that are saving for college, one-third have saved less than $5,000 and two-thirds have saved more than $5,000.
  • Younger parents and parents with younger children are more likely to have started saving than parents with high-school age children.
  • Savings accounts are the most popular savings vehicle, with approximately three-fifths using them. About a quarter have CDs. About half use stocks and mutual funds.
  • A quarter of families are using UGMA and UTMA accounts.
  • About a third of families are using savings bonds.
  • About a sixth of families are using Coverdell education savings accounts (formerly Education IRAs).
  • Approximately one-fifth are aware of section 529 plans and about 16% to 20% say they already have a section 529 plan. When made aware of section 529 plans, half to two-thirds said they would open an account within the next year.

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This suggests that although many families say they are saving for college, they are not saving enough. Moreover, the savings tend to be in taxable accounts, especially low-risk (but also low-yield) investments. The use of tax-advantaged savings vehicles has been growing, however, as more families become aware of them.

2012

The 2012 College Savings Indicator survey by Fidelity Investments reported that parents plan to save only 57 percent of their children's future college costs, but that actual savings will cover only 30 percent. Two thirds of families are saving for their children's college educations.

A survey of 16 and 17 year-old high school students by the College Savings Foundation (survey, press release) reported that 74% want to save for college, but only 45% have started saving. Fewer know how much they should be saving as compared with last year's survey (17% vs. 23%). Fewer are giving up cars and electronics to save as compared with last year's survey (56% vs. 66%). More than three quarters (78%) say costs will influence choice of college, but more are planning on going to more expensive private colleges (21% vs. 16%). More parents are saving for college (45% vs. 39%), with almost a third (31%) using 529 plans. Almost two-thirds (63%) of the students expect to borrow to pay for college, with three-quarters expecting to cover more than 25% of college costs with debt and almost all (94%) are concerned about the debt burden at graduation. Only a quarter (25%) have projected the amount of debt they will need to borrow to pay for college, down from 30% last year. More than two-thirds (70%) expect to use merit scholarships to pay for college, compared with 10.6% of full-time students at four-year colleges actually receiving private scholarships. The College Savings Foundation also reported that 529 plans held $144 billion in assets as of Q4 2011, a 7.3% increase over Q3 2011 and 4.4% increase over Q4 2010, and that about two-thirds (63.5%) of families were invested in age-based asset allocations, representing 66.5% of assets.

2010

FastWeb conducted a survey of 391,325 parents of currently enrolled high school and college students on April 15-21, 2010, to explore the impact of the stock market turmoil on how families save for college using 529 plans, including the influence on risk tolerance, contribution rates and when they take distributions to pay for college costs. The survey also evaluated support for allowing qualified distributions to make payments on education loans. There were a total of 4,996 responses by the cutoff date, with 1,014 (20.3%) parents saying that they had a 529 college savings plan. The survey results are statistically significant with a confidence interval of +/- 3.08% at the 95% confidence level. Some of the key findings of the report include:

  • More than half of parents with 529 college savings plans reported a decrease in value in 2008, with two-thirds of them reporting a decrease in value of more than 10%. Nearly a quarter reported a decrease in value of more than 30%.

  • One-fifth of the parents switched to a more conservative mix of investments and three-quarters left the asset allocation unchanged. Parents whose plans decreased by more than 30% were twice as likely to switch to a more conservative mix of investments as parents who experienced investment losses of less than 20%.

  • One-third of parents stopped contributing to their 529 college savings plans and almost one-tenth decreased the contributions but did not stop them. About two-thirds of parents who lost more than 30% stopped contributing compared with less than two-fifths of parents who lost less than 30%.

  • 10% of parents reporting a decrease in the value of their 529 college savings plans said that they have liquidated or will liquidate the plan by taking a nonqualified distribution.

  • Almost two-fifths of parents reporting a decrease in the value said that they would delay taking a distribution from their 529 college savings plans in order to give the plan time to recover.

  • When asked whether the law should be changed to allow 529 college savings plan distributions to be used to make payments on education loans as a qualified distribution, more than three-quarters of parents were in favor.

  • Almost all parents who said that changing the law would be very beneficial to them and nearly three-quarters of parents who would find it somewhat beneficial were in favor of changing the law. Half of parents who would not find it beneficial were nevertheless in favor of changing the law.
Congress should consider amending section 529(e)(3) of the Internal Revenue Code of 1986 to include payments on qualified education loans within the definition of qualified higher education expenses. The survey results demonstrate overwhelming nationwide support for such a change.

2009

The How America Saves for College survey by Sallie Mae found that most parents are continuing to save for college despite the economy and that saving for college slightly trails saving for retirement. About half of parents are saving the same or higher amount this year despite the economy. One third (33%) have decreased the amount of savings, and 15% are not saving at all. The more money the family expects to pay for college costs, the more likely they are to have maintained or increased the amount they are saving for college. More than 9 in 10 of the parents (92%) think that it is likely or very likely that their children will pursue a higher education. Almost four-fifths (79%) say that they expect to pay for half or more of the college costs. Likewise, almost two-thirds (62%) are saving for college, slightly trailing the percentage who are saving for retirement. Among those who are not saving for college, less than a third (29%) are saving for retirement first. Retirement savings is the top priority for about a quarter of families (27%), compared with 14% listing college savings as the top priority and 14% listing an emergency or rainy day fund as the top priority. The percentage of parents who are saving for college increased with increasing income, with about a third (32%) of families earning less than $35,000 saving for college, compared with two-thirds of families earning $35,000 to $100,000 and four-fifths (80%) of families earning more than $100,000. The survey was conducted by Gallup from March 20, 2009 through April 17, 2009 by telephone of 1,203 parents of children under age 18 who the parents believe are likely to eventually enroll in postsecondary education. The survey excludes any parents with children age 18-24 who are already in college. The survey results are statistically significant with a confidence interval of +/- 4% at the 95% confidence level.

2007

A college financing survey by Bankrate.com (Half of families can't afford college) found that 86% of parents with children under age 18 expect their children to go to college. Only 47% felt that they could afford to send their children to college, although this increased to 63% for parents who were themselves recent college graduates. 78% were willing to make at least one major sacrifice to do so, with lower income families more willing to sacrifice or work two jobs than higher income families. The survey was conducted by GfK Roper Public Affairs & Media of 1,011 adults age 18 or older by random-digit-dial on August 25-26, 2007. Of these, 280 were parents of children under age 18 (153 mothers, 127 fathers). The survey has a margin of error of +/- 6%.

2006

A survey by Alliance Bernstein Investments, Inc., Failing Grades? American Families and Their College Saving Efforts, found that while 94% of parents believe that "helping with college expenses is the best investment they can make in their children's future" and 95% intend to help, only 41% plan on covering all of the college expenses. About two-thirds (65%) would feel guilty if they didn't help their children. One-third have not yet started saving, and of those who have started, about two-thirds (64%) have saved less than $10,000. Only 27% of the parents said that it is "very likely" they will reach their college savings goal. Most of the parents indicated that they spend more on allowances, electronics, vacations and eating out than they do on college savings. 84% of parents believe that there are many scholarships available to help pay for college, 72% believe that their children have special talents that will enable them to win scholarships (72% academics, 47% sports, 38% artistic/musical talents), and that scholarships will cover 24% of their college expenses. 87% of the parents of children age 14 and older think they will apply for financial aid. Two-thirds of parents (66%) say that they will postpone retirement if necessary to help pay for their children's college education. 62% will take out a personal loan, 59% will take a second job, and 47% will take out a second mortgage to help pay for their children's college expenses. 56% will help their children pay back their education loans after they graduate. The survey was conducted in August 2006 of 1,358 parents of pre-college-age children with incomes greater than $50,000.

A poll by AllianceBernstein Investments, Inc. found that 42% of students who graduated with debt described themselves as living paycheck to paycheck, compared with 24% for those who graduated without debt. 34% of those with debt reported selling personal possessions, compared with 17% of those without. 23% reported being satisfied with their current savings (average of $36,500), compared with 42% and $53,900 for those without debt. The average outstanding balance on their debt was $29,000. 43% of students with college debt reported using a credit card to pay for tuition and/or other college expenses, with 32% carrying that debt for more than five years. 29% say that they occasionally or regularly skip payments on their debt. 44% say that education debt lead to delays in buying a home, 28% to delays in having children, 43% to postponements in graduate school (compared with 25% for those with no debt), and 32% said that they were forced to live with their parents. 47% of those with college debt say that their families could have done more to save for college, compared with 18% of those who were debt-free. 22% of those with debt said that finances limited their college choices. 76% reported worrying about money in college. 42% of those with debt said that college jobs affected grades, compared with 30% for those without debt. The poll was conducted on the Internet of 1,508 college graduates ages 21-35 between April 24 and May 1 by Matthew Greenwald & Associates, Inc. 1,007 of respondents graduated college with some debt, 501 graduated with no debt. Survey results were reweighted to be representative of the education, age and gender distribution of the US college graduate population. The overall margin of error was 2.5%, with 3.1% for those graduating with debt and 4.3% for those graduating without debt.

2005

A survey by Vanguard and UPromise found that 37% of parents considered saving for college as their top financial concern, compared with 34% citing saving for retirement. 64% of families with children under age 12 were saving for college, compared with 59% of families with children age 12-17. 30% of families with younger children were receiving help from grandparents and other relatives, compared with 25% of families with older children. Of those who had started saving, the average savings were $4,700 per child and $7,000 per household. Almost four of ten parents who expected their children to matriculate in college were aware of 529 college savings plans. Of the parents who were using 529 college savings plans, 87% cited the tax-free distributions as their primary reason for using the plans. The survey was of 1,109 of parents of children aged 17 or younger and was conducted by FRC Corporation in July 2005.

A survey by Academic Management Services found that 57% of parents waited until their child was in high school before looking into ways of paying for their child's college education. The percentage increased to 71% for parents earning less than $50,000 a year. The survey was of 400 families.

2004

Opinion Research Corporation conducted a survey of college-bound teens and parents of college-bound teens on behalf of Fidelity Investments. The May 2004 survey found that 95% of teenagers feel obligated to help pay for their college costs, and 74% feel that their parents should pay for at most half the costs. The survey also found that under ideal circumstances 93% of parents would be willing to help pay for their children's college education, with half willing to pay for all or most of the costs. The survey also reported that parents think they should start saving for college when the child is two years old, but actually do not start saving until the child is six years old. 79% of parents expect to rely on scholarships, while 62% of teenagers expect to get scholarships. 87% of parents are saving for college, but only 34% are using a section 529 college savings plan. 64% of teenagers do not know how much their college education will cost. 54% said that it would cost about as much as a luxury vehicle or their parents' annual salary. 67% are somewhat or very concerned about not having enough money to pay for their education. Of teens who feel their parents should pay for all or most of the cost of college, 46% said that they would not be able to pay for college otherwise. 42% of parents have not included a discussion of college costs when talking about college plans with their children. (Survey of 477 college-bound teens (ages 14-17) and 376 parents of college bound-teens (household income $35,000 or more) nationwide. Margin of error +/- 5% at the 95% confidence level.)

2002

Harris Interactive conducted a survey for ADP Employer Services on August 22-26, 2002. The survey found that 43% of employees who are currently saving for college or planning to save for college would use a 529 college savings plan if offered through payroll deduction. Of the 40% who were familiar with 529 college savings plans, only 5% indicated that their employer currently offers a 529 college savings plan as part of its benefits package. (Survey of 2,878 adults (age 18+) nationwide, weighted to be representative of the US adult population. Margin of error +/- 1.8% at 95% confidence level.)

KRC Research conducted a survey for the second annual Workplace Report on Retirement Planning for CIGNA Retirement & Investment Services. The August 2002 survey found that 27% of employees reported that their employer offered a 529 or other college funding plans as part of the employee benefits package, while 65% said that they would find a 529 plan helpful. (Survey of 750 employees nationwide. Margin of error +/- 3.6% at the 95% confidence level.)

A July 2002 survey by Cerulli Associates found that only 3.9% of families with children under age 18 had a section 529 plan. Their November 2001 study's figure was 2.4%. The average account balance was $5,000, with 37% of plans having less than $1,000.

Harris Interactive has conducted an annual College Financial Preparedness Poll for Alliance Capital since 1998. The July 2002 poll surveyed a nationally representative sample of 1028 US residents aged 18 and over. It found that 75% of investors lack basic knowledge of 529 plans. 23% were somewhat or very familiar with 529, up from 18% in 2001. After they were informed about 529 plans, 57% said that they would be more inclined to save through a 529 plan, up from 51% in 2001. 51% are looking for the right plan, regardless of whether it is in or out of state. Of the characteristics of section 529 plans, the most popular ones are: the ability to invest through payroll deductions at work (71%), state tax deductions for contributions (70%), the ability to develop a custom portfolio of mutual funds (70%), age-based adaptive allocation portfolios (69%), and a choice among more than 10 investment options (61%). Respondents were expecting to save an average of $20,000 for their children's education. The average age at which the parents started saving was 4 years old, and improvement from the 2001 age, which was 11 years old.

According to a March 2002 survey of 1079 American families by Morgan Stanley, 54% of those who plan to send their children to college have not started saving at all. Three-quarters were unaware of section 529 plans. Of the families who have started saving, 70% started before the child reached the age of 5 and 21% started when the child was 6 to 10 years old.

According to the March 2002 Survey of Parents Saving for Child's College Education conducted by TeleNation (a service of MarketFacts) for Strong Capital Management Inc., 60.9% of parents who were saving felt that they were on track toward reaching their college savings goals. 52.1% said that they would take advantage of payroll deduction for a 529 plan if available. The most popular savings vehicles were: savings account in adult's name earmarked for college (51.2%), other means such as a Roth IRA (39.0%), savings bonds (29.3%), UTMA/UGMA custodial account (26.1%), Coverdell Education Savings Account (21.8%), home state's 529 college savings plan (11.1%), and out-of-state 529 college savings plan (4.9%). (Survey of 533 respondents who said that they are currently saving for college education of at least one child.)

According to a March 2002 survey sponsored by AEGON Institutional Markets Inc. and conducted by Yankelovich Partners/Harris Interactive, 16% of parents with children under age 18 were aware of section 529 plans. The most popular savings vehicle is savings accounts, at 61%. (Survey of 500 parents with children under age 18. Margin of error +/- 4.4%.)

According to the February 2002 State Street's Schoolhouse Capital Survey, 18.8% of those surveyed were aware of section 529 plans and 12.5% knew that withdrawals from section 529 plans, including earnings, were tax-free when applied to qualified college expenses. (1000 respondents.)

2001

According to a December 2001 survey conducted by Richard Day Research, Inc. for Fidelity Investments, parents who are saving for college rated the following features of college savings vehicles as important: return on investment (96%), reputation of investment firm (95%), tax breaks on return and/or withdrawals (93%), savings controlled by account holder and not student (91%), low management fees (90%), variety of investment options and strategies (90%), impact on financial aid eligibility (86%), automatic payroll deduction (61%). Despite reporting that tax breaks are important to them, 68% of college savers are saving in taxable bank accounts and 55% are saving in taxable stocks, mutual funds and brokerage accounts. 62% of these college savers reported that these taxable accounts are their primary college savings. 10% save primarily with taxable US Savings Bonds. 17% report having an UGMA/UTMA account. 16% have a Coverdell Education Savings Account. 11% have prepaid tuition plans and 8% have a section 529 college savings plan. 41% of college savers have less than $5,000 total saved for their children or grandchildren's college education. When informed about section 529 plans, 65% of respondents said that they would be likely to open a plan in the next year. (661 adults. Margin of error +/- 3.8%)

According to a May 2001 survey sponsored by AEGON Institutional Markets Inc. and conducted by Yankelovich Partners/Harris Interactive, 8% of parents with children under age 18 were aware of section 529 plans. Of the parents, two-thirds have started saving for college, with 40% saving regularly. 25% have saved in the past but not recently. Of those who are saving, two-thirds started before age of 5 and half started saving before the child turned 2. Of those not yet saving, 52% said they plan to start eventually, with 25% planning to do so within the next year. The families who save save an average of $2,500 a year per child. The most popular savings vehicles are savings accounts (54%), mutual funds (46%), savings bonds (38%), stocks (26%), CDs (26%), and money market accounts (21%). Percentages total to more than 100% because families may use more than one savings vehicle. (Survey of 510 parents with children under age 18. Margin of error +/- 4.3%.)

According to an April 2001 survey by Putnam Investments, only 1/3 are taking advantage of tax-advantaged investment vehicles, despite 94% saying that saving for college should be tax deferred. 67% of parents are confident they will be able to pay for their children's education. 83% said they are already saving for their youngest child's education. 68% said they started before the child turned 4 years old. 32% have saved less than $5,000. 22% of parents of high school students have saved less than $5,000. 51% save on a monthly basis for their child's education. 59% said they would save more money for children's college education if they could contribute through payroll deduction. 7% of respondents had a 529 plan. 63% were familiar with Coverdell (Education IRAs), but only 12% use them. (Survey of 499 adults with children or grandchildren planning on a postsecondary education.)

2000

According to a December 2000 survey of grandparents conducted by Prince & Associates for Mercury Funds, 59% of grandparents said their savings and investments will be important in paying for their grandchildren's college costs, but 85% said that they have not specifically saved money for their grandchildren's education. 60% said that they would definitely or probably be interested in a section 529 savings plan.

According to a September 2000 College Investing Survey conducted by Elrick & Lavidge for American Century Investments, nearly three-quarters of parents with children under age 18 have started saving for college. 43% have saved less than $10,000 so far. (500 parents. Margin of error is +/- 3% at a 90% confidence level.)

According to a June 2000 survey of parents conducted by Prince & Associates for Mercury Funds, four out of five parents expect to pay for their child's college costs in full, but only 51% have started saving for college, and only 5% are saving on a monthly basis.

According to a May 2000 college savings survey of 380 parents of college-bound children conducted for Fidelity Investments by Richard Day Research and Bruskin/Audits & Surveys, 28% of parents have yet to start saving. Of the two-thirds of parents of college bound high school students who say they save regularly, only one-third has met their college savings goals. 59% of parents with pre-schoolers plan to save enough for all or most of the child's college expenses. (The 380 parents included 191 parents whose oldest child is in high school and 189 whose oldest child is preschool age. The margin of error for both groups is +/-7%.)

1999

According to an October 1999 survey of grandparents conducted by Richard Day Research for Fidelity Investments, 62% said that they would help their grandchildren by contributing to an existing college savings account. (Survey of 502 American grandparents, with one or more pre-teen grandchildren likely to attend college. Margin of error is +/- 5%.)

According to a May 1999 survey by Fidelity Investments, 27% of parents have not yet begun to save for their children's college education. 34% of parents with children under age 14 expect to pay the entire cost of their children's college education. 81% of parents of high school age children (14 to 18) hope to pay at most just half the bill. 83% of parents expect their children will receive scholarships, but only 6% have been notified that their child has been awarded a scholarship. The most popular savings vehicles are: savings accounts (59%), savings bonds (43%), mutual funds (50%), stocks and equities (45%), and CDs (23%). 34% of those who are saving are using a tax-advantaged savings vehicle. 17% were aware of section 529 plans. After hearing a description of section 529 plans, 49% said they would be likely to use a 529 plan in the future.

1998

According to a July 1998 survey by Fidelity Investments, 57% of parents with college-bound children expect to pay for most or all the costs and 43% expect to pay for some or half the costs. 77% have begun saving for children's college costs and 23% have not yet begun to save. 88% are confident they will reach their savings goals. 79% of parents expect their children to receive scholarships, but only 3% have been notified that their children have been awarded a scholarship. The most popular savings vehicles are: savings accounts (63%), savings bonds (52%), stocks and equities (38%), and CDs (26%). 31% are using a tax-advantaged savings vehicle. 10% were aware of section 529 plans. (Survey of 710 adults with college-bound children who expect to pay for at least some college costs. Margin of error +/- 4% at 95% confidence level.)

1997

According to a June 1997 Sallie Mae survey conducted by Gallup & Robinson, only 18% of families start saving for college before their child begins high school. Most parents of college-bound high school students have saved only 25% or less of college costs, with 20% of families having saved nothing at all.

According to a survey commissioned by Alliance Capital (a New York investment firm) and conducted by Louis Harris & Associates, younger parents are doing a better job of saving for college.

Saving for Children's Education
Age RangePercentage Who Are SavingSavings Began At Age
under 3068%2 years, 6 months
30-4951%8 years, 6 months
50 and older36%11 years
overall47%--

1996

According to Money Magazine (September 1996), on average parents have saved only $11,000 for each child's college fund.

 

 
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