COLLEGE SAVINGS 101

Savingforcollege.com

9 ways America's college savings habits have changed
http://www.savingforcollege.com/articles/9-ways-americas-college-savings-habits-have-changed-767

Posted: 2015-05-07

by Kathryn Flynn

For the past five years, Sallie Mae has studied how American families prepare for the ever-rising costs of higher education. 2015’s How America Pays for College report shows once again that the majority of parents believe college is an important investment, and about half of families have started saving for it. While these figures are consistent with last year’s report, as we dug a little deeper we noticed that some attitudes and behaviors have changed – some slightly, some a bit more.

Here are 9 changes according to Sallie Mae’s 2014 and 2015 reports that we thought were worth pointing out:

Amount to Save

1. Changes in the amount families save

  • 62% of parents are setting aside the same amount of money for college as they did last year.
  • 27% say they are saving more than last year.
  • The actual amount parents are saving for college has dropped to $10,040; its lowest level in 3 years.
Students

2. More believe that students should pay for college

  • When non-savers from high-income families were asked why they weren’t saving for college:
    • In 2014, 21% said it was because their child is responsible for paying for their own college.
    • But in 2015, a whopping 47% said their child is responsible for paying for own college.
Families

3. Not as many families are saving for college

  • Middle class families:
    • 2014 – 51% said they were saving for college
    • 2015 – Only 46% said they were saving for college
Deposit Automatically

4. More families set it and forget it

  • Percentage of families who make automatic deposits into their college savings accounts:
    • 2014 – 33% of families
    • 2015 – 41% of families
Help non-savers  say

5. Our reasons for not saving have changed

  • These non-savers said they didn’t have enough money to save for college:
    • 2014 – 40% of high income families
    • 2015 – 45% of high income families
Savings Vehicles

6. Families are using different savings vehicles

  • This year, more families are using general savings accounts to save for college than last year, and fewer families are using 529 plans:
    • 2014: Families using a general savings account = 45%; Using a 529 plan = 29%
    • 2015: Families using a general savings account = 48%; Using a 529 plan = 27%
Savings Habits

7. More parents believe in the importance of having a plan to save for college

  • In 2014:
    • 69% of parents who had a plan felt confident that they would be able to cover college costs.
    • Only 25% of parents who didn’t have a plan felt the same.
  • In 2015:
    • 94% of parents who have a plan agree that having a plan will increase their chances of being able to afford college.
    • 80% of parents who don’t have plan also believed this to be true.
Sacrifice

8. More parents are willing to make sacrifices to pay for college

  • When asked if they would likely stretch themselves financially so that their kids would be able to go to college, here’s how parents answered:
    • 2014 – 80% said yes
    • 2015 – 84% said yes
Savings habits

9. More parents believe there’s more to college than just earning a degree

  • These parents would send their child to college for the social and intellectual experience, regardless of future earning potential:
    • 2014 – 61% of parents
    • 2015 – 65% of parents

For the past five years, Sallie Mae has studied how American families prepare for the ever-rising costs of higher education. 2015’s How America Pays for College report shows once again that the majority of parents believe college is an important investment, and about half of families have started saving for it. While these figures are consistent with last year’s report, as we dug a little deeper we noticed that some attitudes and behaviors have changed – some slightly, some a bit more.

Here are 9 changes according to Sallie Mae’s 2014 and 2015 reports that we thought were worth pointing out:

Amount to Save

1. Changes in the amount families save

  • 62% of parents are setting aside the same amount of money for college as they did last year.
  • 27% say they are saving more than last year.
  • The actual amount parents are saving for college has dropped to $10,040; its lowest level in 3 years.
Students

2. More believe that students should pay for college

  • When non-savers from high-income families were asked why they weren’t saving for college:
    • In 2014, 21% said it was because their child is responsible for paying for their own college.
    • But in 2015, a whopping 47% said their child is responsible for paying for own college.
Families

3. Not as many families are saving for college

  • Middle class families:
    • 2014 – 51% said they were saving for college
    • 2015 – Only 46% said they were saving for college
Deposit Automatically

4. More families set it and forget it

  • Percentage of families who make automatic deposits into their college savings accounts:
    • 2014 – 33% of families
    • 2015 – 41% of families
Help non-savers  say

5. Our reasons for not saving have changed

  • These non-savers said they didn’t have enough money to save for college:
    • 2014 – 40% of high income families
    • 2015 – 45% of high income families
Savings Vehicles

6. Families are using different savings vehicles

  • This year, more families are using general savings accounts to save for college than last year, and fewer families are using 529 plans:
    • 2014: Families using a general savings account = 45%; Using a 529 plan = 29%
    • 2015: Families using a general savings account = 48%; Using a 529 plan = 27%
Savings Habits

7. More parents believe in the importance of having a plan to save for college

  • In 2014:
    • 69% of parents who had a plan felt confident that they would be able to cover college costs.
    • Only 25% of parents who didn’t have a plan felt the same.
  • In 2015:
    • 94% of parents who have a plan agree that having a plan will increase their chances of being able to afford college.
    • 80% of parents who don’t have plan also believed this to be true.
Sacrifice

8. More parents are willing to make sacrifices to pay for college

  • When asked if they would likely stretch themselves financially so that their kids would be able to go to college, here’s how parents answered:
    • 2014 – 80% said yes
    • 2015 – 84% said yes
Savings habits

9. More parents believe there’s more to college than just earning a degree

  • These parents would send their child to college for the social and intellectual experience, regardless of future earning potential:
    • 2014 – 61% of parents
    • 2015 – 65% of parents
 

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