10-Year College Progress Report: Fidelity® Finds Record-High Number of Families Saving and Investing in 529 Plans

Looking Back, Many Recognize Need for Extra Credit: Nearly Half of Parents with Kids Approaching College Say They Could Have Saved $100 or More Each Month

BOSTON — In the 10th edition of its College Savings Indicator Study, Fidelity Investments® announced today that saving for college is at an all-time-high with 72 percent of American families currently saving for their children's higher education – a 24 percent increase since the first year the study was published in 2007. The study has also seen a 62 percent increase in the use of dedicated college savings accounts, such as 529 plans. In fact, this year an all-time high 41 percent of families report owning a 529 college savings account. Other notable trends in college savings behaviors since the first year of the study:



Study Findings 2007 2016
Parents saving for college 58% 72%
Parents saving in dedicated college savings account, such as a 529 plan 26% 42%
Parents considering strategies to manage college costs (such as having child live at home, or graduate in fewer semesters) 53% 71%
Parents considering strategies to generate more income to pay for college (such as having a non-working spouse return to work, or having child work on campus) 62% 75%
Median amount saved for college in the previous year $1,500 $3,000


"While families have adopted more active and effective savings habits over the past decade, this year's study still finds that on average, parents are on track to reach just 29 percent of their college funding goal by the time their child heads to campus," said Keith Bernhardt, vice president of college planning at Fidelity. "Parents still need help identifying how to maximize opportunities to save while meeting other family financial demands, and how to invest that savings in order to help their college dollars grow."

Building on Ten Years of College Savings Progress

Parents are increasingly committed to funding their child's college education, with eight-in-10 citing their own experiences paying for college and managing student loan debt as influencing this decision. On average, parents plan to pay for 70 percent of their children's total college costs, — compared to 57 percent in 2012 (the first year the study asked this question).

This increased intention is driving many to grow their savings. In 2007, families reported saving a median of $1,500 for college in the previous year. Fast forward to 2016, parents report saving a median of $3,000 last year. Parents saving in a 529 plan are contributing even more, with a median of $3,500 reported last year. Furthermore, among 529 plan owners, 45 percent have increased their contribution rate in the last 12 months.

Even with these increases in savings, approximately half (49 percent) say they still feel off-target in reaching their college savings goal. When parents with older kids (10th grade+) were asked to think back 10 years, more than half said they could have saved more each month for college. Of those who said they could have saved more, the median amount more they said they could have saved: $200 per month.

While an additional $200 may sound ambitious, a full 50 percent of parents with kids in 10th grade and higher said they could have saved at least $50 each month, and 46 percent could have saved at least $100. These extra dollars, if invested early and given time to grow, could yield significant savings1:



Increased Savings per Month Potential Additional Accumulation Over 18 Years*
$50 more $19,368
$100 more $38,735
$200 more $77,471
* Assumes a 6% annual investment rate of return Your own account may earn more or less than this hypothetical example.


"For many families, finding an extra $50 or $100 per month may seem out of reach, but these extra dollars could potentially boost college savings by nearly $20,000 or even $40,000. This potential could be a powerful motivator to consider strategies to carve out additional savings," added Bernhardt. "Fidelity's online College Savings Quick Check calculator can show parents the impact of saving a few extra dollars each month, based on their own timeline."

Even for those able to save more, knowing how to maximize those dollars remains challenging. Forty-seven percent of parents say they don't fully understand how to invest their college savings. And seven out of 10 want more specific recommendations on how much they should save for college.

Financial Advisors' Role in Helping Parents Create Clear Savings Plans

This need for more education and guidance may be a contributing factor for more families actively seeking out college planning information over the last decade, including working with a financial professional. In 2007, just 21 percent of parents reported working with a financial professional. Today, that percentage has nearly doubled to 41 percent. Advisors can play an instrumental role in helping parents set up a clear savings plan, potentially leading them to increase the amount they put away each month for their children’s higher education, growing their total savings over time.

Advisors may be able to help parents identify additional sources of funding, such as contributions from grandparents and other family members. While seven-in-10 parents who use advisors agree that family contributions will be important in funding their child’s education, findings show a significant disconnect. Of these parents, only 28 percent say that grandparents have asked how they can help contribute to pay for college, and just 39 percent have asked family and friends to contribute to a college fund in lieu of traditional gifts for special occasions.

"For many families, there is a big opportunity to better engage grandparents and other family members in the college planning and savings process, but parents may not know how to ask for this support," said Matt Golden, vice president, Fidelity Institutional Asset ManagementSM. "Advisors can play a valuable role in initiating and guiding these intergenerational conversations, whether driven by parents or grandparents. These discussions, along with helping parents optimize their investment strategy, are growing topics of guidance for the advisor community."

"What I Wish I Knew" Ten Years Ago About Saving for College

For the 10th edition of Fidelity's study, parents with kids in grades 10 and higher were asked what they wished they had done 10 years earlier to better grow their savings and prepare for college costs. In addition to saving more each month, here are some of their other top tips:

  • Consider opening a 529 college savings account sooner
  • Treat contributing to college savings like a bill you have to pay each month
  • Increase savings by one percent or more each year
  • Prioritize college savings over impulse purchases
  • Open a cash back credit card, with rewards saved to a dedicated college savings account

For other strategies to help create extra savings for college, read Five Lessons Learned for College Savings. Additional resources available to help families save and plan for college:

Tools and Resources for Advisors

Fidelity also provides financial advisor clients with 529 plan information, marketing support and online tools such as the 529 State Tax Deduction Calculator and the College Savings Planning tool. Financial advisors can get more information at institutional.fidelity.com/529 or 1-800-544-9999.

About the Fidelity Investments 2016 College Savings Indicator Study

As part of the study, Fidelity conducted a survey of parents with college-bound children of all ages. Parents provided data on their current and projected household asset levels including college savings, use of an investment advisor and general expectations and attitudes toward financing their children's college education. Using Fidelity's proprietary asset-liability modeling engine, the company was able to calculate future college savings levels per household against anticipated college costs. The results provided insight into the financial challenges parents face in saving for college. Data for the Indicator (number of children in household, time to matriculation, school type, current savings and expected future contributions) was collected by Boston Research Technologies, an independent research firm, through an online survey from May 13 — June 12, 2016, of 2,196 parents nationwide with children aged 18 and younger who are expected to attend college. The survey respondents had household incomes of $30,000 a year or more, and were the financial decision makers in their household. College costs were sourced from the College Board's Trends in College Pricing 2015. Future assets per household were computed by Strategic Advisers, Inc. (a registered investment adviser and wholly owned subsidiary of FMR LLC). Within Fidelity's asset-liability model, Monte Carlo simulations were used to estimate future assets at a 75 percent confidence level. The results of the Fidelity College Savings Indicator may not be representative of all parents and students meeting the same criteria as those surveyed for this study.

About Fidelity Investments

Fidelity's goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.6 trillion, including managed assets of $2.1 trillion as of July 31, 2016, we focus on meeting the unique needs of a diverse set of customers: helping more than 25 million people invest their own life savings, nearly 20,000 businesses manage employee benefit programs, as well as providing nearly 10,000 advisory firms with investment and technology solutions to invest their own clients' money. Privately held for nearly 70 years, Fidelity employs 45,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.

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