Fewer parents are optimistic they will be able to afford their children’s college education, with only 12% saying they are “very confident” they will reach their savings goals, down from 20% last year, according to the College Savings Foundation.
Put another way, 44% of parents are “not very confident” they will reach their college savings goals, up from 31% in 2008.
The weak economy has convinced 33% of parents to save less for college this year than last; among this group, 43% said living expenses was the main reason, and 29% said it is due to an income cut.
Of all of the parents surveyed, 41% have saved nothing at all, and 28% have saved less than $5,000 per child. Forty-seven percent expect student loans to help pay for college, up sharply from 37% last year. Among this group, 68% expect to shift the debt burden onto their child, up from 63% last year.
Evidently, owning a 529 helps boost savings, for 61% of parents invested in a 529 have saved more than $5,000 per child, versus 22% of those without one.
“This survey is a call to action for parents to save early and often, even if they can only start with small amounts,” said Kevin McMullen, chairman of the College Savings Foundation. “The economic reality is that parents cannot count on college loans and grants being available or affordable when their children reach college age. Any shortfall in college funding will cascade as debt burden onto their children’s futures.”
In its own College Savings Indicator study, Fidelity Investments found that parents with high school age students are projected to meet only 11% of future college costs, down from 15% in 2008. For a high school senior, the average cost of four years of college is currently $124,400.