According to a study in the January 26, 2006 issue of Diverse Issues in Higher Education, more parents worry about paying for college than about saving for their retirement.
The mutual fund company The Vanguard Group and Upromise Investments Inc., a company that channels shopping rebates into educational savings accounts, commissioned the study. In the survey of parents with children under the age of 18, 37% said saving for college was their primary concern, while 34% reported that saving for their retirement was their top financial woe. The majority of the remaining families stated that saving for a house, car or other major purchase was their top priority.
The study also found that families with children under the age of 12 were the biggest savers at 64%. For those with children ages 12 to 17, 59% were saving. 30% of families with younger children were getting help from grandparents and other relatives, while just 25% of families with older children were. In the study, the average amount saved by the families so far was about $4,700 for each child.
The rising cost of a college education was thought to be the reason for this concern. Tuition and fees at four-year private institutions rose approximately 6% for the 2004-2005 academic year and 7% for a four-year public institutions.
I admit I have not saved anything for Tyler’s education so far. I guess like a lot of parents I figure I can always borrow the money or hopefully he will receive a full four-year scholarship.
Fortunately, parents have many options available for them today such as Upromise and the 529 college savings plans which are plans set up by the various states to help families save for their children’s college education. Withdrawals are tax-free when used for education purposes.
For more information about the 529 Savings Plan go here.
More information on Upromise can be found here.