According to a recent survey by Fidelity Investments, parents are becoming increasingly more diligent about saving for college.
Results showed that, on average, 69 percent of families are currently saving for college—up from 64 percent in 2014. Parents also intend to assume a larger portion of anticipated college costs for their children—66 percent of total, which continues an upward trend from 57 percent in 2012.
And millennial parents (born between 1981 and 1997) are most aggressively seeking to ensure adequate funds are available to their children once they reach college age. Young parents, many of whom are saddled with huge student loan debt, plan to cover, on average, 74 percent of their children’s college costs. This compares with 64 percent for Generation X parents and 60 percent for baby boomer parents.
In fact, 46 percent of millennials plan to pay the full cost of their children’s college educations, as compared to only 32 percent of Gen X and 27 percent of boomers. This is a huge upward trend from as recently as 2007, when only 16 percent of parents in the same 30 to 34 age group planned to foot the entire college bill.
"Millennials have weathered challenging economic conditions for much of their adulthood. Many have channeled that experience into setting college savings goals early, and taking steps to make savings a regular habit," said Keith Bernhardt, vice president of retirement and college products at Fidelity.
Despite all the optimism, however, Fidelity reports that parents are on track to pay only 27 percent of their college funding goal, down one percentage point from last year.
Boston Research Technologies, an independent research firm, conducted the online study on behalf of Fidelity, among a national sample of 2,470 families with children 18 years old and younger. The families contacted all had annual household incomes of at least $30,000.
In the same survey, parents report that saving for college is their number two savings priority, behind saving for retirement but ahead of paying off their own student loans. On average, parents report that their child was 7.2 years old when they started saving for their college, and 39 percent of parents report opening a 529 plan—up from 32 percent last year.
While millennials lead the way in saving for college, they aren’t particularly optimistic about the future. Eighty-two percent of millennial families believe the cost of college is becoming prohibitive, and 75 percent agree that student loan debt will hinder their child’s ability to be financially independent post-graduation.
More information on the College Savings Indicator Study may be found on the Fidelity Investments website.