|
 Whether they will be able to do so is questionable, though, given
the relatively small amounts most have saved so far.
Seventy-four percent of parents aged 30 to 34 polled for the 2015
Fidelity Investments College Savings Indicator have put aside money
for college, compared to 58 percent of parents the same age who were
polled in 2007.
Nearly half (48 percent) of the group born between 1981 and 1985
plan to pay for all college costs, compared with just 16 percent of
parents the same age in 2007, according to the survey conducted for
Fidelity by Boston Research Technologies.
Millennial parents have spent much if not all of their adult lives
living with the fallout from the financial crisis, said Keith
Bernhardt, vice president of retirement and college products at
Fidelity. That experience has made them cautious about debt and
determined to help their children avoid burdensome student loans, he
said.
"They've seen the repercussions of taking on too much debt and the
cost of that," Bernhardt said.
The current batch of thirty-something parents have saved a median
$1,500, though, compared to the $1,000 median amount saved by
parents of the same age in 2007.
Overall, the parents surveyed hoped to pay for 66 percent of their
children's college costs. Fidelity projected that based on current
savings rates, they will be able to cover just 27 percent of
projected college costs on average, Bernhardt said.
Fidelity's survey does not represent the general population. Those
surveyed were far more likely to have a college degree, for one
thing.
The research firm interviewed 2,470 parents with children aged 18
and younger and household incomes over $30,000 a year or more. Among
parents born between 1981 and 1997, 85 percent of those surveyed had
attended college and 61 percent had college degrees.
A Pew Research Center survey last year found that 34 percent of
people born between 1980 and 2000 had college degrees and 61 percent
had attended college.
The higher rates of education may explain why these parents are so
gung-ho about helping their kids pay for college: these parents
understand the benefit. An earlier Pew study found that 86 percent
of college graduates felt their own education was a good investment,
even as the majority of Americans (57 percent) said the higher
education system fails to provide good value for the cost.
[to top of second column] |
While they may not be saving enough, the millennial parents polled
have done many things right, Bernhardt said. The vast majority of
millennials saving for college put money aside monthly (79 percent),
compared to 72 percent of GenX college savers and 66 percent of
Boomer savers. Most millennial savers (57 percent) started saving
before their children turned six, compared to 47 percent of GenXers
and 37 percent of Boomers.
Forty-three percent of millennials polled use 529 college savings
plans to save (Fidelity just so happens to offer 529s), compared
with 37 percent of GenX and Boomers.
One thing parents are still getting wrong, though, is being afraid
that saving for college will hurt their kids' ability to get
financial aid. Fidelity found 53 percent had that fear, even though
money saved in a parent's name—such as in a 529—has only a small
impact on aid. Financial aid formulas expect parents to use less
than 6 percent of their non-retirement savings for college. Incomes
factor far more into financial aid formulas than assets.
"If you save $10,000, you'll lose just $600 in financial aid,"
Bernhardt said. "They want people to save."
(The author is a Reuters columnist. The opinions expressed are her
own.)
(Reporting By Liz Weston; Editing by Andrew Hay)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
