Survey reveals many families don’t save for college
September 5, 2012
There's no denying that the cost of getting a college education has skyrocketed in recent years. According to the College Board, the average annual cost for a four-year public college or university is $8,240 for in-state students and $20,770 for those who live out-of-state. Private college is even more expensive, averaging $28,500 per year.
However, a new study found that many Americans are not adequately prepared to foot the bill. Fidelity Investment's sixty annual College Savings Indicator Study revealed the majority of people are not looking at the whole picture when it comes to paying for a college education.
It found that just 31 percent of parents with college-bound children consider the total cost of college, graduating with debt, the impact of school selection and how the major their children choose could affect job prospects and earning potential. More than half (61 percent) said they are actively making changes to their plans to better manage potential post-graduation debt.
Additionally, the study found the typical family is currently on track to cover just 30 percent of the cost for their kids to attend college. To make up the difference, many will depend on loans, grants and scholarships.
And, although more than three-fourths of parents (78 percent) don't want to burden their children with hefty student loans, in many cases it may be unavoidable. Recent reports find graduates leave school with an average of $25,250 in student loan debt.
"With college costs increasing an average of 5 percent every year, saving enough for a child's education will continue to be a challenge for many families," said Fidelity's Keith Bernhardt, vice president of college planning at Fidelity Investment. "More than ever, it's critically important for families to review their college goals and savings strategies early and make adjustments to avoid burdens brought on by large amounts of post-graduation debt."
On a positive note, the survey of more than 2,300 parents revealed the number of those saving for college (66 percent) has remained steady, despite the difficult economy.
While the results of the survey may initially discourage mothers who want to earn a college degree from doing so, they should know that there are several ways to make college more affordable without amassing large amounts of debt. Scholarships for mothers, grants for parents and other financial aid can help moms who want to go to school a financial reality.
