COLLEGE SAVINGS FOUNDATION 21 EXECUTIVE SUMMARY PARENTS SAVE FOR KIDS COLLEGE DESPITE CARRYING STUDENT DEBT 29s, as they are called, are intended to support families in meeting the relentlessly rising expenses of a college education. The average annual tuition costs of attending a 4-year public and a 4-year private college or university in 214-21 continued to rise beyond the rate of inflation. Including tuition, room, board and expenses, the average total cost for an in-state student at a 4-year public college is $18,943, and for a 4-year private college is $42,419, according to the College Board. College Savings Foundation s 9th Annual Survey: Parents Motivated to Save One-third of parents are still shouldering student debt but are determined to change that for their children and are choosing savings to finance their college. The majority, 1%, of parents responding to the 9th Annual College Savings Foundation State of College Savings Survey said savings is their number one strategy for funding their children s college costs, up from 4% last year, and ahead of loans; grants, scholarships or aid; and current income. Overall, there was an upswing in parental saving: 3% of all parents are saving; and nearly half, 48%, have saved at least $, per child. Parents used these tools to help them along: 33% of parents own a 29 college savings plan. 42% use automated monthly savings plans, up from 38% last year; and 7% save more than $ a month in them. 1% would ask family or friends for college savings instead of a material gift. We are encouraged to see parents across generations avidly saving for their children s college and that their own student debt is a motivator not a deterrent to saving, said Mary Morris, Chair of the College Savings Foundation, a leader in helping American families save for their children s college education. In the survey, 82% of parents with college debt said it had made them consider other strategies for their children. A breakdown of the three major age brackets of parents revealed a strong savings bent among younger parents who are using savings tools like 29s and automatic savings programs to help them: The 21-21 State of College Savings Survey was conducted by the College Savings Foundation using an online Survey Monkey survey of over 8 parents of children 18 or under, from across the country, age and income categories. The College Savings Foundation (CSF) is a Washington, D.C.- based not-for-profit organization whose mission is to help American families achieve their education savings goals, by working with public policy makers, media representatives and financial services industry executives in support of education savings programs. www.collegesavingsfoundation.org
Parents age 31-3: 4% have student debt; and 91% said it made them consider other strategies for their children. 4% are already saving. % said that saving is their primary way to pay for college. 31% own a 29 college savings plan. 43% have saved more than $, per child. % have automatic savings plans; and of that, 38% save between $1- per month. Parents age 3-4: 29% are paying off debt. 7% said it has made them consider different strategies. 4% are saving. 48% say savings is the primary way to pay for college. 37% are using a 29 college savings plan. % have saved more than $, per child. 41% have automatic savings; of which 33% save between $1-$ per month. We are encouraged to see parents across generations avidly saving for their children s college and that their own student debt is a motivator not a deterrent to saving, said Mary Morris, Chair of the College Savings Foundation Parents age 4-: are still paying off student loan debt; 74% said it would make them consider other strategies. % are saving; 4% say primary way to save is through savings. 32% use 29s. 1% have saved more than $, per child. 39% have automatic savings accounts. 33% save between $- per month but another 4% are saving more than that. This doesn t mean the kids get a free ride: 74% of parents expect their children to contribute to college costs, and nearly half of parents, 49%, say their children will get a job to help pay for college. Other sources of college funding include financial aid, where 9% of parents expect their children to receive it, mostly in the form of grants and scholarships. They also expect to take out loans. 1% expect to borrow including 4% who said that education loans taken by student and/or parents were their top borrowing choice. 9% of parents expect that it will take them or their children a minimum five years to pay off the loans after graduation. The College Savings Foundation s 21-21 State of College Savings Survey was conducted by Survey Monkey of over 8 parents across the country and income levels. 2 C OLLEGE SAVINGS FOUNDATION
PARENTS SAVE TO HELP CHILDREN AVOID DEBT One-third of all parents are still shouldering student debt Q. Are you currently paying off student loan debt? 32% 8% Debt leads the vast majority 82% to consider other options Q. Has your college debt made you consider other strategies for your children? 82% 18% 3% of parents are saving for their children s college Q. Do you plan to help fund your child/children s college education? (Select One), I plan to save, but have not started yet (19%), I anticipate taking out loans (3%) 21, I am saving 3% 19 %, I am/plan to save and anticipate taking out loans (7%), but I do not know how I am going to pay (7%), I expect they will get scholarships (3%), I expect the government to help me (1%), I feel it is their responsibility (1%), I cannot afford it (%) 214, I am saving % 19%, I plan to save, but have not started yet (19%), I anticipate taking out loans (4%), I am/plan to save and anticipate taking out loans (8%), but I do not know how I am going to pay (7%), I expect they will get scholarships (4%), I expect the government to help me (1%), I feel it is their responsibility (2%), I cannot afford it (%) Savings is the Number One way for parents to pay for college: 1% up from 4% last year Q. What is the primary way that you plan to pay for your child s college costs? Current Income Other 4% 8% Current Income Other 7% 3% Grants/ Scholarships/ Direct 13% 1% Savings Grants/ Scholarships/ Direct % 1% 4% Savings Loans/Borrowing Loans/Borrowing 21 SURVEY O F PARENTS 3
Nearly half have saved more than $, per child Q. How much have you saved for your children s college education (per child)? 48% saved > $, 4% saved > $, $,1 - $, >$, >$, $2,1 - $, thing 8% 4% $,1 - $, 4% $2,1 - $, 28% $,1 - %% % 29% 1% $2, $,1-12% 17% $2, 14% 2% $,1 - $, <$, $,1 - $, thing <$, Nearly one-third use 29 college savings plans Q. Do you know what a 29 college savings plan is?, I own one 33% 2%, but I don t know much about them, I own one 32% 28%, but I don t know much about them, I have never heard of them 33% 8% 32%, I plan to start one, I have never heard of them 8%, I plan to start one 42% use automatic savings plans Q. Do you currently have an automatic monthly savings plan set up for college savings? 42% 8% 38% 2% 3% are saving between $1-$ per month Q. How much do you save monthly? $1 - $ $1 - $ Under $ Greater than $ 7% 1% 2% 17% 3% $1 - $ Under $ Greater than $ 9% 1% 23% 19% 34% $1 - $ $1 - $ $1 - $ 4 C OLLEGE SAVINGS FOUNDATION
BREAKDOWN BY GENERATIONS Parents have student debt at all ages Q. Are you currently paying off student loan debt? 4% % 29% 71% 7% Ages 31-3 Ages 3-4 Ages 4 - Q. Has your college debt made you consider other strategies for your children? 91% 9% 7% 74% 2% Ages 31-3 Ages 3-4 Ages 4 - Q. Do you plan to help fund your child/children s college education? (Select One) 4 4 4 4 PERCENT 24 KEY Ages 31-3 Ages 3-4 Ages 4-2, I am saving 1 12, I plan to save, but have not yet started 4 4 4 4, I anticipate taking out loans 7, I am/ plan to save and anticipate taking out loans 9 9, but I do not know how I am going to pay 3 3, I expect they will get scholarships 2 2 1 2, I expect the government to help me, I feel it is their responsibility 3 8, I cannot afford it 2 21 SURVEY O F PARENTS
Q. How much have you saved for your children s college education (per child)? 29 29 2 2 2 2 21 21 2 19 18 2 KEY PERCENT 1 1 1 11 1 9 8 1 Ages 31-3 Ages 3-4 2 4 4 Ages 4- thing <$, $,1 - $, $,1 - $2, $2,1 - $, $,1 - $, >$, Q. If you are saving for college, what vehicles are you using? (Check all that apply) 4 37 4 3 2 31 31 31 32 27 29 27 3 2 23 2 PERCENT 2 19 1 2 KEY Ages 31-3 Ages 3-4 1 8 9 4 4 1 Ages 4- Mutual funds/ stocks/bonds - outside of a 29 plan CDs or bank savings accounts - outside of a 29 plan 29 college savings plan Retirement account Life insurance Coverdell Education Savings Account N/A Other C OLLEGE SAVINGS FOUNDATION
Q. What is the primary way that you plan to pay for your child s college costs? 48 4 4 4 PERCENT 22 2 2 KEY Ages 31-3 Ages 3-4 Ages 4-2 Savings 14 13 14 Loans/Borrowing Grants/Scholarships/ Direct Aid 9 Current Income 3 Other 2 Q. Do you currently have an automatic monthly savings plan set up for college savings? % % 41% 9% 39% 1% Ages 31-3 Ages 3-4 Ages 4 - Q. How much do you save monthly? Greater than $ 12% $1 - $ 14% Under $ 12% $1 - $ Greater than $ 1% $1 - $ 2% Under $ % 2% $1 - $ 38% $1 - $ 33% $1 - $ Ages 31-3 Ages 3-4 Greater than $ 23% Under $ (2%) 2% $1 - $ $1 - $ 22% 33% $1 - $ Ages 4-21 SURVEY O F PARENTS 7
OTHER WAYS PARENTS ARE FUNDING COLLEGE 4% of parents are borrowing and using Education Loans Q. If you are borrowing, what do you anticipate will be your number one college financing source? (Check one) 21 Education Loans 4% 7% Second mortgage or Home Equity Loan 7% Credit Card or Credit Line Borrowing against my retirement (4%) Borrowing against other investments (3%) Other (1%) 38% N/A 214 Education Loans 4% Second mortgage or Home Equity Loan 7% Credit Card or Credit Line % Borrowing against my retirement (3%) Borrowing against other investments (2%) 41% Other (1%) N/A 9% of parents expect loan burdens for at least years Q. The average Public College student graduates with over $2, in loans (and much more for Private College). How long do you anticipate it will take you or your child after graduation to pay off the average college tuition and costs funded through loans? - years - years - years 1% 38% - years 1% 3% N/A 1% >2 years 7% -2 years N/A 1% >2 years 8% 2% -2 years Parents expect children to kick in for college costs Q. Will your child contribute to paying for college?, up to one-third, up to one-third 49% 2% 4% 2% 1% 9% 19% %, between one-third and two-thirds, over two-thirds, between one-third and two-thirds, over two-thirds 8 C OLLEGE SAVINGS FOUNDATION
How? Parents say Get a job! Q. How will they contribute to college costs? Own Savings Own Savings 14% % Loans 12% % Loans Job 49% Scholarships/ Grants/Fellowships Job 49% 2% Scholarships/ Grants/Fellowships Military Funding (1%) Other (2%) Military Funding (1%) Other (2%) 9% of parents expect finanical aid for their children Q. How much financial aid do you anticipate receiving? 37% Up to one-third of college costs 39% Up to one-third of college costs ne 31% ne 29% Over two-thirds of college costs 11% 21% Between one-third and two-thirds of college costs Over two-thirds of college costs % 22% Between one-third and two-thirds of college costs Q. What form do you expect the financial aid to take? Grants/Scholarships 8% 82% Loan Package 4% 47% 21 Work Study 29% 34% 214 Other 1% 1% % % 2% % 4% % % 7% 8% 9% % 21 SURVEY O F PARENTS 9
Over half would ask friends and family for funds Q. Would you ask friends/family to make a college savings gift instead of material gifts? 28% 27% 1% 4% 21% 19% I don t know I don t know College Savings Foundation 2111 Wilson Blvd., Suite 7 Arlington, VA 2221 73-31-91