By Richard J. Polimeni, Chair of the College Savings Foundation
The books, the classes, the laptops, the meal plans, and all the unforeseeable costs associated with higher education can seem daunting. In honor of College Savings Month, Nick Jr. and the College Savings Foundation (CSF) want to remind you to start saving early. Paying for college does not have to be overwhelming.
The CSF recently conducted its 11th Annual State of College Savings Survey among 800 parents, evenly distributed across income levels, across the country. The insights associated with saving for higher education and investing in 529 plans are helpful to consider when preparing for your child’s future.
Start Saving Early and Often
Among all survey respondents, 83% are saving. Of those, 57% started saving between the time their child was born and 5 years old. A strategy that 75% of them are using is saving systematically; meaning they are saving a specific amount on a regular basis (monthly, quarterly or annually).
Communicate with Your Kids
71% of parents expect their children to contribute to college costs. In CSF’s 2017 How Youth Plan to Fund College survey that was released in May, 87% of high school students have talked to their parents about their involvement in funding college. It is key to have open communication with your child about their educational goals and what expectations are as to their involvement in funding higher education.
Impact of Free College
Respondents seem to be focused on college saving even at a time when “free college” has become a popular topic of discussion. Perhaps part of that reasoning is awareness of the related costs beyond tuition and fees. Understanding there are limits to free college proposals, 60% said they were aware many college expenses are not covered under current proposals. 75% of respondents thought college should be free; and 77% thought all states should adopt limited free college tuition. With these responses in mind, an incredible 80% said they would still save for higher education if free college were adopted across the United States.
28% of parents said their child had considered not going to college at all – and 48% of those students decided to look at other options. Among the reasons given by students for considering not attending college were they didn’t want their parent(s) to bear the burden of college costs and the belief that their career goals could be achieved without college.
In addition to saving, top strategies for coping with the costs of college are attending community college for two years and transferring to a four-year college (29%), living at home (22%), and attending a state school (15%). There are also benefits to parents for investing and saving for higher education. Over half of parents – 51% – knew investing in 529s could also fund their own educational expenses such as graduate school or job retraining. Parents also recognized that 529 plan contributions grow tax free from federal tax and that there are 34 states that have tax deductions or credits. We recommend you research if your state provides you with a state tax deduction or credit for contributions to your home state 529 plan.
The 2017 State of College Savings Survey shows that more and more parents are saving early and often. Many tools are available to help you start saving today! Browse the Nick Jr. ‘529 Resources’ to learn about the best plan for you and your family! Read more about the College Savings Foundation and browse numerous other savings resources by visiting www.CollegeSavingsFoundation.org.
The College Savings Foundation (CSF) is a Washington, D.C.-based not-for-profit organization helping American families save for higher education. www.collegesavingsfoundation.org. Follow the College Savings Foundation on Facebook, Twitter, and LinkedIn to stay updated on college savings techniques and resources.
Richard J. Polimeni has been an active board member of the College Savings Foundation for more than 8 years.