While the cost of a college education increases every year, far too few parents are saving for their children's future. As a result, more mutual fund companies, recognizing the need for parents to prepare, are training advisers to discuss college savings plans with parents and grandparents.

The estimated cost of a 17-year-old's college education is $54,880 for a public university and $131,361 for a private college. Ninety-five percent of parents said they plan on helping their kids pay for college and 41% plan to cover all of their children's expenses, according to a survey of 1,358 parents conducted in August by the national polling firm Mathew Greenwald & Associates of Washington for AllianceBernstein of New York. Parents participating in the poll had at least one child under the age of 18 who they identified as likely to attend college and a household income of $50,000 or more.

However, the amount of money the typical parent plans to save will cover only 23% of their children's undergraduate expenses. Parents with children ages 14 to 17 plan to have an average of $12,000 saved when their child reaches college age, the survey found.

Firms such as AllianceBernstein and The Hartford of Hartford, Conn., have started discussing with advisers the importance of broaching the topic with clients. Earlier this month, both firms launched specialized 529 marketing campaigns for advisers that include sales materials and presentations. "We found that some advisers were making it a core part of their business, and others weren't tapping into the college savings arena," said Jeff Coghan, director of Smart 529 Programs at The Hartford.

Of all the college savings products available, the most popular choice is 529s, and they are likely to become more popular. In August, Congress made the tax-free withdrawals permanent as part of the Pension Protection Act of 2006. When Congress first allowed for tax-free growth and withdrawals in 529 plans in 2001, the provisions were going to sunset in 2010.

In an online survey of 400 parents and grandparents in May and June, The Hartford found that 71% of parents indicated they are likely to spend time planning for college education in the next five years, while 66% of grandparents said they are likely. Moreover, the importance of advisers speaking with parents is crucial as nine out of 10 parents who discussed a plan with an adviser reported owning a college savings plan. Among those who did not discuss college savings with an adviser, only 57% have a 529 plan.

The survey also indicated that many advisers are not adequately addressing the issue, as 55% of parents had to ask their adviser for information on college savings strategies and 22% felt the discussion had occurred too late.

As a result, The Hartford has just launched a "Just Ask" program to encourage advisers to initiate college savings conversations with clients in three steps. First, parents need to be asked if they are saving for their children's education. The majority, The Hartford tells advisers, are eager to discuss savings strategies. The next step is to ask grandparents if they are saving for their grandchildren's future, as many grandparents want to help financially. Lastly, advisers need to turn awareness into action and have clients set up a regular investment savings plan.

The best thing an adviser can do for parents is to run an illustration using a calculator tool that allows them to examine how much money they will need to save, not only for one child, but for the whole family, Coghan said. In the past, the high numbers have scared parents into inaction. However, the numbers will allow a family to get their arms around what they will need to send their child or children to college so that they can then work with an adviser to set feasible savings goals, he explained. Other sources of payment can include scholarships and merits.

AllianceBernstein also just launched a "College Savings Crunch" campaign designed to educate parents about the importance of setting and abiding by a college saving strategy, as well as to raise advisers' awareness about reaching out to clients on the topic. Next month, the firm will hold an interactive Internet conference for advisers on the topic.

"Parents have difficulty juggling different savings needs, such as retirement and college savings, and need help planning," said Michael Conrath, vice president of college savings plans at AllianceBernstein. Beside its external campaign, the firm is also in the process of training its entire sales force and staff about the importance of college savings plans, Conrath said. The training includes the findings of the research recently conducted, he added.

"Advisers need to break down the advantages of savings plans and also explain complex fee structures, as they want a client to trust them, said Arbab Hassan, research analyst at 401 Kid, an investment advisory firm in New York that focuses on education planning. "Parents and grandparents are becoming savvier, and firms are losing business because they are looking elsewhere than their adviser to start college savings plans."

(c) 2006 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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