The number of parents saving for college and the amounts they are saving are both at four-year highs, according to “How America Saves for College 2016,” a recent national study by Sallie Mae and conducted by Ipsos.
The new report reveals that 57 percent of today’s parents are saving for college, up from 48 percent in 2015, and the average amount saved is $16,380, up from $10,040 the year prior.
In this climate of increased savings, over half of all parents feel confident they’ll be able to meet college costs, and the vast majority of parents who have set a savings goal are confident they’ll meet their goal.
“These higher levels of optimism, confidence, and savings correspond with other economic trends we’re seeing, such as declines in unemployment and increased optimism about the economy among the U.S. public,” says Julia Clark, senior vice president, Ipsos Public Affairs.
Here are some of the reports key findings:
Millennials Most Committed
Millennial parents — age 35 or younger — feel more confident than other generations about meeting college costs, and they’re more committed to saving for college. More Millennials are saving (65 percent, vs. 50 percent of Gen X parents and 61 percent of Baby Boomer parents), and Millennials have saved more money ($20,155, on average, vs. $12,428 for Gen Xers and $18,323 for Baby Boomers).
When it comes to paying for college, a greater percentage of Millennial parents believe the parent should be solely responsible compared to their Gen X and Baby Boomer counterparts.
More 529 College Savings Plans
While use of 529 college savings plans among parents rose to 37 percent, up from 27 percent the prior year, these tax-advantaged plans still lag far behind general savings accounts, despite the fact that those who use 529 plans save roughly 25 percent more, on average.
More Parents Making Plans
The proportion of parents with a plan to pay for college rose to 51 percent in 2016, up from 42 percent in 2015. Parents with a plan save significantly more: $18,389, on average, compared to the $10,468 reported by parents without plans.
Additionally, nearly three-quarters of parents agree that students are more likely to attend college if they know savings have been set aside for them.
“Preparing for college requires significant personal and financial commitment, and it’s gratifying to see so many parents, and especially younger parents, taking proactive measures to make college possible,” says Raymond J. Quinlan, chairman and CEO, Sallie Mae.
The full “How America Saves for College 2016” report and a related infographic are available at SallieMae.com/HowAmericaSavesForCollege. Join the conversation at Facebook.com/SallieMae or #HowAmericaSaves.
If your family is currently saving for college or planning to get started, the experts at Sallie Mae recommend the 1-2-3 approach: 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.
“Above all, these study results provide tangible evidence of the value parents continue to ascribe to higher education,” says Quinlan.