Parents Using 529s Have More Saved for College

September 17, 2009 ( - Fidelity's annual College Savings Indicator study found that more parents of college bound children, ages 18 and younger, have started saving and are better utilizing tax-advantaged savings accounts such as 529 plans, but the challenging economic environment of the past year has impacted overall savings levels.

The Indicator shows parents of children in high school can cover only 11% of the total cost of their children’s college education, down from 15% in 2008.

Sixty-three percent of parents with children ages 18 and younger have already started saving for college costs compared to 60% in last year’s study. These parents are on track to cover an estimated 18% of their children’s projected future college expenses – a slight decline from last year’s Indicator number of 21%, according to a press release.

Parents utilizing a 529 plan have a significantly higher Indicator number, currently projected to cover 36% of their children’s future college costs, Fidelity said. The study also shows that more parents are using dedicated savings accounts, including 529 plans (32% in 2009 vs. 30% in 2008) and non-dedicated savings accounts with funds earmarked for college (28% in 2009 vs. 23% in 2008).

Fewer parents surveyed feel confident they will be able to secure a student loan for the full, remaining amount needed to help pay for their child’s education (43% in 2009 vs. 68% in 2008). Most parents with children in high school (79%) agree that having a college education is a minimum requirement today for a good job.

Fidelity’s study found that parents who work with financial advisers report having received specific college-savings guidance on how to pay for college in the current market environment (62%), including: adjusting investment strategies (32%), exploring supplemental funding sources (25%), and using rewards programs to boost savings (27%). However, many (58%) of the parents who use an adviser wish they could get more assistance on their college-related financial decisions, with the top three areas of need being the grant process (22%), financial aid process (19%), and strategies for efficient college savings (18%).

Fidelity's annual College Savings Indicator study found that as parents struggle to save for their children's college expenses, many are exploring ways to earn more income and control expected college costs.

According to a press release, the study revealed:

  • 17% of parents with children 18 years old and younger plan to have a non-working spouse return to work (up from 13% in 2008);
  • 17% plan to have themselves or a spouse take on a second job;
  • Fewer parents expect their kids to attend a private school (8% in 2009 vs. 11% in 2008); and
  • More parents plan to have their child live at home and commute (50% in 2009 vs. 44% in 2008).

High school seniors surveyed by Fidelity overwhelmingly (90%) said they should help pay for at least some college costs, and they also are considering strategies to cut or control expenses.

Study results include:

  • High school seniors said they expect to help their parents pay for college with two main income sources - their own savings (42%) and working while in school (76%).
  • To cut down on college costs, high school seniors report having discussed with their parents taking advanced placement classes in high school to finish college in less time (36%) and starting college at a less expensive school and transferring to complete a degree (36%).
  • Seniors also heavily factored cost into the selection of a college. Nearly three-fourths of seniors surveyed (73%) said they are selecting their preferred colleges based on cost, followed by location (68%), and specific areas of study (60%).
  • Students also discussed with parents more radical ways to fund college such as delaying college to save more (8%) and going to school abroad to take advantage of lower fees (7%).

Fidelity's College Planning Web Portal, which includes information on college savings options, and tools and calculators to help individuals make more informed college planning decisions, is at .