Parents Want to Pay for College but Not Saving for It

Here's an interesting set of statistics from Money magazine's January issue on what parents would like to do versus what they are doing when it comes to paying for/saving for their kid's college expenses. For instance, the piece notes that parents have good intentions when it comes to paying for college. Money's stats:

• 41% [of parents] plan to pay the full [college] bill
• 54% plan to pay some costs

A couple of interesting points here before we go on:

1. 95% plan to pay at least something. That seems pretty high to me -- though I guess paying $250 for a text book could qualify as paying "something."

2. 5% are planning on the "you're on your own, kid" method. I would have guessed that this would have been higher based on comments like these. But maybe parents have good intentions but don't follow up on them. It would be interesting to know if only 5% paid nothing once it got to college costs.

Now on to the cold, hard facts of what parents are doing to save for college. The stats:

• 31% of parents who plan to help haven't yet saved anything
• 64% of parents who plan to help have saved less than $10,000

The missing piece of information here is the age of the kids. If a child is 1-year-old, not having any savings is no problem. If she's 18-years-old, it's a big problem.

But I think we can all agree that parents aren't saving enough for their children's education -- even if you assume they only need to cover one-third of the costs. In my opinion, they need to consider the three ways they can save for college and hop to it. It's better to save early and often and put the power of compounding on your side as you seek to save for increasingly higher education costs.

Comments

[Dus10]

It comes down to personal responsibility... and few people seem to have it. Here in Indiana, our treasurer spent a good portion of his efforts coercing the state legislature into offering a tax credit of 20% (up to $1000 in credits) for contributions to the state's 529 plan. He talked with a few different groups of parents about saving for school and provided information about this new plan (effective this year). However, people still made excuses as to why they couldn't find the money to save! Later, he asked them how many had plasma TVs at home. It is just shocking that 35% of the people could make it a priority to buy a plasma TV, but could not make it a priority to save for their children's educations.