College savings have nearly doubled in the last decade, but parents still feel lost as higher education costs continue to escalate, according to Fidelity Investments.
The median amount parents are saving for their kids’ college education jumped from $1,500 in 2006 to $3,000 last year, according to the 10th annual College Savings Indicator Study by Fidelity Investments. Parents with 529 college savings plans did better, saving a median of $3,500 last year, with 45 percent of them increasing their contributions last year.
Likewise, the percent of parents saving for college costs reached an all-time high of 72 percent, a 24 percent increase from when the study started.
Marking another all-time high, 41 percent of parents saving for college are now using 529 savings plans, the study says. The study included 2,196 families with children 18 years of age and younger who expect to attend college.
Even with these increases in savings, 49 percent of the parents say they still do not feel they are reaching their goals. On average, parents would like to pay 70 percent of their children’s education costs.
“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,” says 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,” he adds.
“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,” says Bernhardt.
The number of families working with a financial advisor has nearly doubled in 10 years, from 21 percent to 41 percent this year.
“Advisors may be able to help parents identify additional sources of funding, such as contributions from grandparents and other family members,” says Fidelity, but only “39 percent have asked family and friends to contribute to a college fund in lieu of traditional gifts for special occasions.”