NEWARK, Del.--(BUSINESS WIRE)--Nearly six in 10 parents are saving for college, one-third saved more this year than last, and the average amount saved — $18,135 — is the highest amount reported in the last five years of “How America Saves for College,” the national study released today by Sallie Mae — the nation’s saving, planning, and paying for college company — and Ipsos, an independent global market research company.
After saving for general needs and emergencies, parents earmark funds for college more than for any other specific purpose, alongside retirement. Only 10 percent of parents plan to tap their retirement funds for college, down from 20 percent in 2016 — the last time this report was published. To keep their college savings on track, six in 10 parents (61 percent) contribute a set amount to their college fund on a regular basis. To find more money for college, 30 percent of parents have cut back on discretionary spending, and 27 percent have reduced their household expenses.
This year marks the first time tax-advantaged 529 college savings plans hold the largest share of college savings — 30 percent. That said, fewer than one-third of parents saving for college are using them (29 percent). Most parents who are not using 529 plans report not being aware of or knowing enough about them, or not having enough money to invest in them.
“This year’s report findings reflect America’s rising consumer confidence levels overall,” said Julia Clark, senior vice president at Ipsos. “The data show that parents are making smarter – and more optimistic – decisions about their plans for education for their children.”
Nearly nine in 10 parents who have a college savings goal (86 percent) are confident they’ll achieve it. The average goal is $55,342, and parents are about one-third of the way toward meeting it, an improvement from 2016, when parents had saved roughly one-fourth of their goal. On average, parents start saving for college when their child is 7. Parents who have planned how they’ll pay for college have saved more than twice as much as those without a plan ($22,169 vs. $9,208). They are also three times more likely to be confident they’ll be able to meet the cost of college than those who haven’t planned (73 percent vs. 27 percent.)
“Most parents aspire to give their children the opportunity to attend college, and it is encouraging to see them saving more and employing smart habits, and taking deliberate actions to make college a reality,” said Raymond J. Quinlan, chairman and CEO, Sallie Mae. “Our research shows most parents are proactively preparing financially to give their children the advantages of higher education, and having a plan pays off.”
“How America Saves for College 2018” reports the results of online interviews Ipsos conducted in January and February 2018 of 2,003 American parents with at least one child younger than 18. The report and a related infographic are available at SallieMae.com/HowAmericaSaves. Join the conversation on social media with #HowAmericaSaves.
Sallie Mae and Wise Bread will co-host a Twitter chat to discuss the report on Thursday, May 24, at 3 p.m. EDT. Follow the chat using #HowAmericaSaves and #WBChat.
Sallie Mae recommends the 1-2-3 approach to saving for college: first, open a savings account; second, set a goal and make deposits regularly; and third, explore tax-advantaged options such as 529 college savings plans.
For more information about saving, planning, and paying for college, visit SallieMae.com.
Ipsos is a global independent market research company ranking third worldwide among research firms. At Ipsos, we are passionately curious about people, markets, brands, and society. We make our changing world easier and faster to navigate, and inspire clients to make smarter decisions. We deliver research with security, speed, simplicity, and substance. We believe it’s time to change the game — it’s time for Game Changers! Visit http://www.ipsos-na.com to learn more.
Sallie Mae (Nasdaq: SLM) is the nation’s saving, planning, and paying for college company. Whether college is a long way off or just around the corner, Sallie Mae offers products that promote responsible personal finance, including private education loans, Upromise rewards, scholarship search, college financial planning tools, and online retail banking. 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.