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Parents had an average $10,040 set aside for
college earlier this year, compared to $13,408 last year, the
survey found. Savings for all purposes, including retirement and
emergencies, also plunged to $98,867 from $115,604 last year.
"The biggest reason for the decrease in savings are the increase
in the cost of living and having unexpected expenses come up,"
said Michael Gross, head of the higher education practice at
market research company Ipsos, which conducted the survey for
Sallie Mae.
Ipsos interviewed 1,988 parents of children under 18 for the
survey between Jan. 14 and Jan. 28.
Roughly half of all parents are saving for college, but among
families with incomes between $35,000 and $100,000 the rate fell
to 46 percent this year from 51 percent last year, the survey
found.
Still, nine out of 10 parents believe that college is an
investment in their children's future, with 84 percent believing
their children will earn more money with that education, and 78
percent that a college degree is more important than in the
past.
General savings accounts continued to be the most widely used
vehicle for college funds, with 48 percent of savers using them,
followed by 27 percent who used tax-advantaged 529 college
savings accounts. Nearly one-quarter (23 percent) said they
saved in checking accounts.
High-income families were far more likely to use 529 college
savings plans, with 49 percent of high-income savers using them
compared to 20 percent of middle-income and 17 percent of
low-income savers. Among non-savers, four in 10 were unaware of
the existence of 529 plans, similar to previous years.
Parents who don't save also tend to overestimate how much
financial aid their children will receive. Nearly two-thirds of
those who don't save said it was because they believed their
child would get enough financial aid or scholarship help to
cover college costs. Scholarships and grants typically cover
about one-third of the total average cost of college, according
to a corollary Sallie Mae study, "How America Pays for College
2014."
Just the act of creating a plan for college savings seems to
boost the odds of success, said Martha Holler, a Sallie Mae
representative. Families who formulated a plan for college
savings saved 46 percent more than families without a plan, the
2015 Saving for College survey found.
Parents who save for college began on average when their oldest
child was 6.5 years old. The initial expenses of infancy and the
toddler years are over while the child's formal education has
begun, which leads parents to think about future education
costs, Holler said.
(Editing by Beth Pinsker and Ted Botha)
[© 2015 Thomson Reuters. All rights
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