Parents Falling Behind on College Savings
The survey by AEGON Institutional Markets Inc. also found that:
- over 60% of parents who are not currently saving expect to pay the tuition expenses during their child’s college years,
- a quarter expect their children to pay for college themselves,
- some 17% anticipate other relatives will cover the tab,
- only 10% already have enough money saved for their children’s higher education
Furthermore, the study revealed that
- over three-quarters wish they knew more about how to invest for their children’s college expenses,
- almost one fifth worry about the taxes they will have to pay on their college savings,
- the same proportion are concerned that their savings will be useless if their children do not attend college
According to AEGON, on average, parents expect to pay 60% of their children’s college expenses, with 25% anticipating they will fully fund their children’s college costs. Parents, on average, believe they must save approximately $45,500 to pay for one child’s tuition over four years.
In terms of the investment vehicles that those with savings plans use to shore up funds for their children?s college education,
- almost three-quarters do not change their investment vehicles,
- only 11% said they have switched to more conservative investments, and
- only 14% said they moved to more aggressive investments
Asked what they would do should their investments start to decrease in value:
- almost 49% would move their money to a more conservative vehicle,
- while 43% would leave the money alone,
- only 11% would invest more money,
- while 7% weren’t sure what they would do
Perhaps the most troubling finding was that some 40% don’t even know the total return on their college savings investments.
The study was conducted between April 15 and May 15, 2001 and included 510 interviews with parents of children under the age of 18.
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