An online survey conducted this year by the College Savings Foundation, a Washington D.C.-based nonprofit, finds that high school students are taking increased initiative to save for college.
According to the seventh annual “How Youth Plan to Fund College” survey, 60 percent of high school students, the highest level since 2010, are saving for college, compared with 51 percent in 2015. The percentage of students who plan to help pay for their college costs also hit its highest level this year since the survey’s inception, climbing to 89 percent from 75 percent a year ago.
Of the more than 500 high school sophomores, juniors and seniors nationwide who responded to the latest survey, 53 percent said they already have jobs to accumulate savings for higher education and 63 percent plan to work while attending college.
Mary Morris, the chair of the College Savings Foundation, thinks the steady increasing trend in student savings partially stems from additional family dialogues about funding college and parental modeling of good savings behavior.
This year, 86 percent of students have spoken with their parents about their involvement in funding college — a 14-point jump from 72 percent in 2015. More than three-quarters of students who are saving for college (79 percent) have parents who are also savings for the student’s education.
Exactly three-quarters of the parents of student savers have saved more than $5,000 for college. Meanwhile, 68 percent of the parents of all the students surveyed have saved more than $5,000 for college, well ahead of 58 percent last year.
“You’ve got to have a plan and everyone’s got to be involved,” says Morris, who is also the CEO of Virginia529 College Savings Plan, the nation’s largest 529 plan. “If the lessons stick, the kids see that.”
Morris has also observed some students take the initiative by pulling their parents over to the Virginia529 College Savings Plan’s booth at sporting events and the state fair. Sometimes the parents are more hesitant, she says, and it’s obvious they haven’t spoken to their children about college funding.
Among the high school students surveyed this year, 78 percent have saved at least $1,000, with 32 percent indicating they’ve saved more than $5,000. Although $1,000 may not seem like much money in the scheme of college sticker prices, “if you don’t have it it’s huge,” says Morris. Families that receive financial aid typically wind up with a funding gap of a couple thousand dollars, she says, and this savings can be used to pay for books and fees.
Savings accounts are the primary vehicle in which 71 percent of high school students are saving for college and 20 percent are using 529 college savings plans. Morris sees this as an opportunity to reach more people about the benefits of segregating college savings in a 529 plan. “Bucketing really helps,” she says, noting that kids with dedicated college savings are more likely to attend college.
Only 37 percent of the students surveyed know that 529 college savings plans can also be used to fund graduate education and lifetime learning. But nearly all (91 percent) know that financial aid can include loans, which require repayment. And 85 percent plan on getting scholarships, up from 78 percent last year. Although 71 percent says they will or may borrow money outside of financial aid to attend college, up from 55 percent last year, three quarters of these potential borrowers are concerned about paying back loans.
Morris says Virginia now requires high school students to study personal finance and economics. She has also gone into first grade classrooms through the Virginia529 College Savings Plan to help students learn about wants and needs. “Financial empowerment is giving people tools to do the right things,” she says.