A recent survey by Sallie Mae found that six in every 10 parents are successfully saving for their kids' college education.
When it comes to paying for their kids’ college education, six in 10 parents are successfully saving up for it, according to a survey by private student loan company Sallie Mae, released on May 17. According to the data, the average amount saved is $18,135, which is the highest that amount has been in the past five years.
Julia Clark, the senior vice president at Ipsos, which conducted the survey, said that the report suggests that more parents are making better financial decisions when it comes to saving for their kids’ education.
For example, in 2016, 20 percent of parents planned to tap into their retirement funds to help their children pay for college. That number was down to 10 percent according to the most recent survey.
Outside of preparing for emergencies and general living expenses, parents put aside more money for their children’s college fund than anything else. Sixty-one percent of parents chose to save a set monthly amount in order to keep their savings on track. In order to find the money to save, 30 percent of parents cut back their discretionary spending, while 27 percent cut back on their household expenses.
Only 29 percent of parents reported using a 529 college savings plan to help them save. Parents said this was because they either weren’t aware of that option or they didn’t have enough money to invest.
86 percent of parents who have a savings goal feel confident they will be able to achieve it. The average savings goal is $55,342, with most parents being about one-third of the way there. This is an increase from 2016, when most parents were about a quarter of the way toward reaching their goal.
The study also showed that parents who set a savings goal tend to save more than those without a goal. Parents who set a saving goal saved an average of $22,169. This is more than twice as much as parents without a savings goal, who saved an average of $9,208.
This study demonstrates that most parents are committed to giving their kids a college education, according to Raymond J. Quinlan, CEO of Sallie Mae. He added that the research shows the importance of having a savings goal.
For parents who are interested in taking a proactive approach to saving for their children’s education, Sallie Mae recommended that parents open a savings account and set a savings goal first. Once they are regularly making payments, they can begin exploring other options, like 529 college savings plans.
Having a college savings plan, in addition to pursuing college grants and scholarships, can help reduce the need to borrow for tuition and other costs. Another smart way to reduce your need to borrow is to choose a school that offers more funding.