Survey Says: Parents Still Saving for College Despite Economy
Sallie Mae and Gallup just released the results of a survey of how American families save for college. The survey found that most parents are continuing to save for college despite the economy and that saving for college slightly trails saving for retirement.
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.
Expectations concerning the amount of money parents will contribute toward college costs increase with increasing income, ranging from slightly more than half (56%) of families earning less than $35,000 expecting to pay for half or more of college expenses, compared with 90% of families earning over $100,000. The percentage who are saving for college also 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.
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.
Of those who aren’t saving for college, almost two-thirds do not have enough money to save and half have other priorities for their savings, with less than a third saving for retirement first.1 About a third are not saving because they expect that their child will qualify for scholarships or financial aid, a quarter because the child will attend an inexpensive college and a sixth consider it the child’s responsibility to pay for college, not the parents’. A third haven’t started saving for college yet, a fifth haven’t started because the child is too young and 5% haven’t started because the child is too old or it is too late to start saving.
The “How America Saves for College” survey findings are based on telephone interviews of 1,203 parents of children under age 18 who the parents believe are likely to eventually enroll in postsecondary education. The survey was conducted from March 20, 2009 through April 17, 2009. 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.
1Percentages may sum to more than 100% because parents could select all choices that applied to them.