NEWARK, Del.--(BUSINESS WIRE)--Optimism and financial confidence is on the rise for parents saving for college in the wake of the financial recession, finds the fourth “How America Saves for College” national study from Sallie Mae and Ipsos. Holding steady from last year, 51 percent of parents are saving for college, ending the post-recession decline, and the annual amount they saved increased 29 percent from the prior year to an average of $3,398.
“The recession tested family finances but parents never wavered from their commitment to help their children pay for college,” said Charlie Rocha, senior vice president, Sallie Mae. “Parents today have a renewed spirit of financial optimism giving them the motivation to increase their college savings fund and get back on track towards their goals.”
Saving for college continues to be a top savings priority for families, second only to retirement. Of a family’s total savings, half was designated for retirement and one-tenth for college. However, despite the negative consequences of using retirement funds, nearly one in 10 parents say they’re planning to tap them to pay for college.
Nearly half of parents have a plan for how they will handle tuition bills, expecting to cover 40 percent with income and savings, considerably more than the 23 percent parents without a plan expect to pay out of pocket. The most common college planning activities besides saving money include investing in children’s skills with scholarships in mind, AP courses to earn college credits and purchasing life insurance to help cover the cost.
Not having enough money remains the top reason for not saving. Many parents expect scholarships and financial aid to cover costs, some simply don’t know their best options or they believe it is the child’s responsibility to pay for college. High-income parents who are not saving are four times more likely than low-income parents to say paying for college is their child’s responsibility. What distinguishes families who save from those who don’t is their stronger belief that college is an investment in their child’s future and their willingness to stretch themselves financially.
Sallie Mae provides three ways to save for college: its Upromise college savings rewards program that helps families save when making everyday purchases from participating retailers, the SSgA Upromise tax-advantaged 529 college savings plan, and high yield savings accounts and CDs from Sallie Mae Bank, member FDIC.
The report, “How America Saves for College,” is based on a nationally representative survey of 2,020 parents of children under age 18 conducted in November and December 2013. The full study and related infographic are available at www.SallieMae.com/HowAmericaSaves.
Hear how America saves for college first-hand from YouTube sensations CJ and Jake Booth interviewing parents about saving for college in a new video. Join the conversation on how to save, plan and pay for college at Facebook.com/SallieMae and Twitter.com/SallieMae.
Sallie Mae (NASDAQ: SLM) is the nation’s No. 1 financial services company specializing in education. Whether college is a long way off or just around the corner, Sallie Mae turns education dreams into reality for American families, today serving more than 25 million customers. With products and services that include Upromise rewards, scholarship search and planning tools, education loans, insurance, and online banking, Sallie Mae offers solutions that help families save, plan, and pay for college. Sallie Mae also provides financial services to hundreds of college campuses as well as to federal and state governments. Learn more at SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.