College Savings Foundation

How Youth Plan to Fund College

June 5, 2018

Contact: Lynthia Romney (914) 238-2145/(914) 589-2140 romneycom@gmail.com

GEN Z CHARTS A PRACTICAL PATH TO COLLEGE ACCORDING TO 2018 COLLEGE SAVINGS FOUNDATION SURVEY OF HIGH SCHOOL STUDENTS

9^th annual survey reveals focus on skills-building in higher education and saving to get there

Washington, DC – Today’s high school students are practical consumers who are choosing their higher education paths knowing the costs of school and the trade-offs necessary to fund it. The College Savings Foundation’s 9^th annual How Youth Plan to Fund College survey of sophomores, juniors and seniors across the country revealed the characteristics of independence and self-reliance that are often attributed to their age group, “Generation Z.” For example, 86% of high schoolers are looking to pay at least part of their higher education costs. 75% said that costs are a factor in deciding which school to attend, and the majority, 57%, is already saving for it.

“High school students are taking responsibility for their education choices and making decisions early in life to support them,” said Richard J. Polimeni, CSF Chair. “We’re encouraged to see that saving is already an important part of their education planning process.”

The self-determining characteristics were also displayed in how they will help cover higher ed costs or reduce expenses. 85% of high school students plan to work in college and 62% plan to cut costs by living at home. The majority (51%) of all high school students are currently working to earn money for their higher education.

The findings also revealed that students are thinking about the long-term value of their education. 81% would like to see colleges promote education and skills-training rather than only offering majors for future employment, and 70% would prefer to go to an institution taking that approach. In addition, 63% said that their career plans were affecting their school choice.

Students are talking with their parents about college plans. 82% talk about their involvement in financing college. When speaking to their parents about college-related topics, 43% of students said the number one topic was the career path they want to follow, with 27% saying it was the type of school they wanted to attend.

53% of students surveyed are going to a 4-year college, with 41% going to public and 12% to private college. Over a third – 36% of students – are heading to community college (28%) or vocational/career programs (8%).

Students seem to embrace multiple paths to higher education, with the majority, 52%, saying that they think of vocational/career schools and apprenticeship programs in the same way as they do college.

Motivated to Save and Reduce Debt Dependence

The survey found that the majority of high school students, 57%, are actively saving for higher education, primarily in a savings account and in 529 college savings plans. Students have been successful in amassing funds, with 65% already saving $1,000 or more towards higher education costs.

Accordingly, they prioritize monetary gifts to help with that savings. 67% of high school students would rather receive money for education on special occasions rather than tangible gifts.

The majority of students, 52%, said their parents are also saving, primarily in savings accounts and 529 college savings plans. 59% of those whose parents were saving said their parents have saved more than $5,000 and 35% said their parents have saved more than $15,000.

Students’ focus on saving may be due at least in part to their concern about student debt, which currently exceeds $1.4 trillion in the U.S. 65% think that they will or possibly borrow money outside of a financial aid package, with 43% anticipating needing to borrow more than a quarter of their education costs.

The majority, 54%, is very or somewhat concerned about their ability to pay it back.

Some additional findings of the survey:

Costs impact higher ed decisions in a variety of ways: 65% of students said that costs affected whether they attend college at all. A majority, 52%, said that costs mattered in deciding on whether to attend college part- or full-time.

Students will contribute significantly to the costs of higher ed: A total of 86% — 36% definitely and 50% possibly – are planning to pay for part or all of their higher education costs. Of those, 64% of them will pay for at least a quarter of their total education costs.

Work is the leading reason to take a gap year: 21% of students are taking a gap year, but 58% of them were doing so to work.

The 2018 How Youth Plan to Fund College survey reached over 500 high school sophomores, juniors and seniors across the country via Survey Monkey. The College Savings Foundation (CSF) is a Washington, D.C.- based not-for-profit organization helping American families achieve their education savings goals. www.collegesavingsfoundation.org

Congress created 529 Education Savings Plans in 1996 under Section 529 of the Internal Revenue Code. They are state-sponsored, tax-advantaged vehicles for qualified post-secondary education expenses, such as tuition, fees, books, required supplies, equipment and room and board. There are two types of 529 Plans: savings plans, which allow families to save for expenses, and prepaid tuition programs, which generally allow families to make advance tuition payments to cover future attendance at a designated in-state public college or university system. Most states offer a 529 plan, and some states offer both savings and pre-paid plans.

A primary focus of CSF is building public awareness of and providing public policy support for 529 plans – an increasingly vital college-savings vehicle. CSF’s members include investment managers, broker-dealers, governmental bodies, law firms, accounting and consulting firms, and non-profit agencies that participate in the sponsorship or administration of 529 college savings plans.

College Savings Foundation
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Rockville, MD 20850
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Email: jdisanza@collegesavingsfoundation.org

PRESERVING, ENHANCING 529 PLANS
CSF’s key program goals are specifically focused on promotion, protection and enhancement of 529 plans.

A FORUM FOR DISCUSSION AND ACTION:
CSF brings together the industry and consumers on policy questions and provides a means for unified action on issues of concern to 529 plan investors and the industry. CSF provides a framework to assist with the orderly development of the programs and, in particular, acts as a resource for policymakers who share CSF’s objective of helping families realize their educational goals.

Tax Benefits

Investments grow on a tax-deferred basis, and earnings are free of federal income tax.
Contributions are eligible for gift tax exclusion as long as certain conditions are met.
Generally, account owners can remove contributions and future earnings from their taxable estate.
Certain 529 plans offer some type of state tax deduction when residents invest in their own state’s plan.

Flexibility

There are currently no income limits. Any U.S. resident or citizen, regardless of income, can open an account.
Account owners can withdraw money at anytime.
Funds may be used to pay qualified education expenses at any qualified educational institution in the U.S. (and some schools abroad), including any accredited public or private college or university, graduate school, two-year community or junior college and vocational and technical schools.
Eligible educational institutions include most U.S. schools and some schools located abroad. The institution must be eligible to participate in the U.S. Department of Education student aid programs. To determine if a school is an eligible education institution, search for its federal school code at www.fafsa.ed.gov.
Most plans offer low initial investments and a variety of investment options fitting various levels of risk and time horizons.

Control

The account owner decides when and how money in the account is withdrawn.
Account owners can change beneficiaries and investment options, according to IRS guidelines.

Start planning for your child’s future today!