Fidelity® Study Finds that 58 Percent of Families Saving for College Have a Financial Plan in Place to Help Reach 2014 Goals; Parents Intend to Save an Average of $405 Each Month
BOSTON – A new Fidelity study finds that for those parents who have resolved to save for college this year, many are committed to seeing their resolutions through and a have a plan in place to stay on track.
The Fidelity Investments® 2014 College Resolutions Study recently surveyed American families that have started saving for higher education, examining their goals for 2014 related to college saving and planning. According to the study, 85 percent of parents report that saving for college is one of their top three savings priorities for 2014. One-third (34 percent) name it their top savings priority for the New Year.
Families are also setting solid goals this year. Eighty-eight percent say they plan to save at least as much as they did in 2013, with 60 percent intending to save even more. Many have a plan in place to achieve this objective: 58 percent report having a financial plan to help keep college savings on track. Most of these parents plan to save a fixed amount monthly, averaging $405 per month.
“For many parents, saving for college is an area of focus throughout the year, but the New Year is an ideal time for families to reassess their finances, set new savings goals and priorities, and establish a college savings plan,” said Keith Bernhardt, vice president of college planning at Fidelity. “While many resolutions are quickly abandoned because they aren’t as specific and attainable as they could be, we are encouraged that families are setting concrete college savings goals, and developing actionable plans that will help them keep these resolutions.”
A first step in saving for college is to open a dedicated college savings account, like a tax-advantaged 529 plan, where earnings can be used free of federal income tax for qualified higher education expenses like tuition, room and board, and books. Fifty percent of respondents report they already have a 529 college savings plan. Among this group, 93 percent intend to contribute at least as much as they did in 2013, with more than half (53 percent) setting their savings goal even higher in 2014.
Parents Identify Saving Strategies, Make Resolutions to Engage in the Planning Process
Among parents who have a financial plan in place for college savings, the number one strategy they identify is their intention to save monthly (81 percent). Other strategies include saving part or all of their 2013 tax refund (37 percent), ear-marking a portion of a bonus or raise (36 percent), and reallocating funds previously allotted to day care or after school care expenses (24 percent) or other savings goals (29 percent).
Many families are also planning to save a portion of monetary gifts their children may receive throughout the year for birthdays or other holidays (37 percent). Half of parents surveyed report that family and friends already contribute to their child’s college savings fund. Grandparents in particular are playing an important role, with 41 percent contributing.
Families are establishing important college planning goals as well. The study found that for many families, college resolutions go beyond savings to include a ‘to-do list’ related to better educating themselves and their children about the cost of college, and resources available to pay for college when the time comes. Among the tasks on parents’ college planning ‘to-do list’ for 2014:
- Talk to their children about how much college costs and how their family will pay for it (58 percent)
- Research scholarships and grants to help offset costs (53 percent)
- Consider talking to a financial or planning expert for help (48 percent)
- Learn more about how the financial aid process works (39 percent)
- Ask their children to save some of their own earnings (30 percent)
College Planning Resources to Help Families Stick to 2014 College Savings Resolutions
To help families kick-start their college savings and stick to their resolutions, Fidelity offers a 2014 College Savings Tips Calendar, providing a monthly outline of suggested strategies to help make college planning a year-long commitment. For instance, January is an optimal time to set college savings goals and priorities, and to revisit or establish a plan to reach those goals, while February could be spent ensuring that saving is a monthly automated process by setting up direct deposits into a dedicated college savings account.
Fidelity’s College Savings Resource Center offers online planning tools and calculators to help families at any stage of the college savings process, and also includes a broad overview of savings options and strategies, and guides to search and apply for financial aid and scholarships. Also, a series of expert Viewpoints articles, “Get a head start on college,” “How much college can you afford?,” and “The ABC’s of 529 college savings plans,” include college planning tips and strategies.
Fidelity also offers complimentary access to dedicated college planning representatives, as well as in-person guidance and college planning seminars at 183 investor centers nationwide. Fidelity provides financial advisor clients with 529 plan information, marketing support and online planning tools such as the 529 State Tax Deduction Calculator and the College Savings Planning tool. To learn more about Fidelity’s college savings resources, financial advisors can visit advisor.fidelity.com/529 or call Fidelity at 1-800-544-9999.
This study presents the findings of an online survey consisting of 511 adults, 18 years of age and older. The survey respondents had household incomes of $30,000 a year or more, have started saving for college, and were the financial decision makers in their household. Interviewing for this survey was completed December 12-17, 2013 by Research Data Technology, which is not affiliated with Fidelity Investments. The results of this survey may not be representative of all adults meeting the same criteria as those surveyed for this study. For more information on Fidelity’s College Resolutions Study, an executive summary can be found on Fidelity.com.
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.5 trillion, including managed assets of $1.9 trillion, as of November 30, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.
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