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Survey: Parents with student debt are saving for college while their kids are still young

October 19, 2019

BILL SCHACKNER
Pittsburgh Post-Gazette

September 19, 2019

A new national survey of parents eyeing college for their children is out, and two of the findings suggest that adults both recognize the importance of saving and are doing so while their kids are still young.

One reason why that’s true might be found in another of the findings: 37% of those parents are still saddled with student debt of their own.

Results from the annual College Savings Foundation survey appear to illustrate both the impact that America’s $1.5 trillion student debtload is having on families, and how they are embracing strategies that could help reduce their future need to borrow.
The 2019 State of College Savings included roughly 1,000 parents of varied incomes. It was conducted by Survey Monkey on behalf of the Washington D.C.-based foundation, a not-for-profit organization helping families achieve their educational savings goals.

The issue of student debt has become a major talking point nationally, and has figured prominently in the 2020 presidential race. Pennsylvania students who take out loans feel the bite in particular, graduating with the second highest average debt nationally at $37,061, eclipsed only by Connecticut, where the average debt is $38,669.

Those figures are from state-by-state data released this week by the Institute for College Access & Success. It finds the average debt nationally among the class of 2018 is $29,200.

Among the College Savings Foundation survey results: A vast majority, 90%, expect to pay for their child’s higher education, and in fact, 77% said they were saving before their child was six years old. Even so, they want their children to bear some of the burden.
Of those surveyed, 73% expect their children to contribute and 47% expect them to get a job to help finance their education costs.
The survey found that 31% are saving more than last year.

Three quarters of the respondents, 76%, already are saving for their children’s college costs. The survey found that 70% of savers garnered more than $5,000 per child, and 47% more than $10,000 per child.

“Parents clearly understand the long-term impact of saving in funding their children’s education,” said foundation chair Richard Polimeni. “This is vitally important in reducing families’ reliance on student debt.”  

He said the subject of college savings can be daunting and lead to procrastination. But it’s better to plan sooner rather than later. “Whatever the dollar amount is that you can afford is what you do,” he said.

The survey found that 529 college savings plans remain the most popular vehicle for college savings.

Some 41% of savers said it was their primary savings option. These plans let funds build up free of federal and, in general, state tax for qualified education expenses, according to the foundation.
Just over two-thirds of the parents recognized that having dedicated savings made it more likely that their children would aim for college, according to the survey.

It also found that many parents appear to have broadened their idea of what college is to include venues beyond tradition four-year campuses. It found 59% of parents consider vocational and career schools as similar to public and private college.

This is the 13th year that the foundation has conducted a national benchmark survey of parental attitudes and actions in the area of college savings. The survey is being released during College Savings Month.

More than seven in 10 parents questioned appear to recognize that saving was a far less expensive path to a degree. That may be good, since it also was clear that the debt they already hold — generally, and specifically in student loans — are impediments.

Parents were asked what would make it easier to save up money. The top answer: “Less debt.”

Bill Schackner: bschackner@post-gazette, 412-263-1977 and on Twitter: @Bschackner

During these changing times, the College Savings Foundation recollects wise words once spoken by Nelson Mandela, “Education is the most powerful weapon which you can use to change the world.” CSF’s education savings mission serves families and individuals of all income levels and ethnic backgrounds across the nation.