The ability of parents to save for their children’s college tuition has declined since last year, according to a study released today by Fidelity Investments of Boston.
The ability of parents to save for their children’s college tuition has declined since last year, according to a study released today by Fidelity Investments of Boston.
The College Savings Indicator, an online survey of 3,000 parents with college-bound children, found in its August survey that parents are projected to meet only 21% of the total cost of their children’s college tuition, representing a 3-percentage-point decrease from last year.
The cost of college is estimated at $120,000 for today’s high school seniors.
The economy is having a significant impact on savings, with 60% of those surveyed citing daily expenses as a barrier.
As a result, 34% said they have decreased the amount they are saving, or stopped saving completely, for college.
In addition, 35% reported they may need to delay retirement to pay for tuition.
The housing crisis is also having an impact.
A full 24% said that the decline in housing values will have an impact on their ability to tap home equity to pay for college.
A full 14% said they expect to take a personal loan.
Also, 62% said they plan to rely on student loans. That is an increase over last year’s 53%.
But 32% said they don’t believe they can get a loan for the amount they need.
A full 74% said they had not sought any financial guidance or education about savings options.
More advisers are suggesting a 529 savings plan, the study found.
Thirty-six percent of the parents who had sought advice said their adviser suggested opening a Section 529 college savings account, up from 30% last year.
Despite the challenges cited, 60% said they have already started saving for the future.
As of Aug. 31, Fidelity had more than $3.2 trillion in assets under custody, including managed assets of $1.5 trillion.
