America's Parents Get a B-Minus on Their College Savings Report Card

http://www.savingforcollege.com/articles/americas-parents-get-a-b-minus-on-their-college-savings-report-card

With today’s rising college costs, it’s unlikely that most parents think about saving for college without also considering future student loan debt. Seventy-eight percent of parents say they don’t want to burden their children with hefty loans, which may be encouraging more families to focus on saving.

In our 7th annual College Savings Indicator study, we asked more than 2,500 parents how prepared they are to pay for college. This year’s most promising news: the number of families saving for college is at an all-time high 69%. Of course, not all parents expect to cover all college bills. On average, parents plan to pay 62% of total costs, including tuition, room and board and other fees. The bad news: they are on track to meet just 34% of that savings goal.

When we asked parents to grade their college savings progress, they gave themselves a B-minus. While there’s definitely room for improvement to bump that to an “A,” we found that many are taking steps in the right direction, with more families saving in 529 college savings plans (up 5% from 2012) and 61% having a financial plan in place to help reach college goals.

Just like a final exam, earning a top grade in saving for college takes planning, dedication, and time.

Here are a few steps to boost your GPA:

• Save early. Save often: Every year, this is the #1 piece of advice older parents stress to younger parents. Saving regularly in a dedicated account can add up and help keep you on track.
• Talk it out: Parents who first started talking to their kids before age 10 about paying for college were more likely to have started saving (93%), compared to those who started talking later (80%).
• Make it a family affair: Discuss saving for college with your kids and the importance of establishing financial goals. Involve your kids in creating – and contributing to – a college savings plan. Will they save a percentage of monetary gifts or work part-time to offset school expenses?
• Get more detailed: As children mature, so should conversations. As college approaches, discuss the total cost of college and how choices may affect their post-grad finances including the implications of taking loans. Consider differences between choosing a public vs. private school, and the impact a major may have on job prospects and projected salary.
• Do your homework: Use online planning tools and calculators to estimate how much you need to save. Take time to understand the financial aid process, what you may qualify for, and features of different loan types. Research how grants and scholarships can help offset costs. Fidelity offers a series of Viewpoints articles on these topics to get you started.
• Ask for help: For added guidance, consider working with a financial professional.

Are you earning a passing grade when it comes to college savings?

Keith Bernhardt is the vice president of college planning at Fidelity Investments.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Fidelity Brokerage Services LLC, Member NYSE, SIPC,
900 Salem Street, Smithfield, RI 02917
663333.1.0
© 2013 FMR LLC. All rights reserved.

Respondents of the survey are parents with college-bound children of all ages. Parents provided data on their current and projected household asset levels including college savings, use of an investment advisor and general expectations and attitudes toward financing their children’s college education. Respondents had household incomes of $30,000 a year or more, and were the financial decision makers in their household. Fidelity Investments, 2013 Fidelity College Savings Indicator, August 2013