The high cost of living has prevented two-thirds of parents from putting money aside for their children’s college education, according to a recent CFP Board of Standards survey.
The survey also found that a third of parents were still repaying their own student loan debt, which hinders their ability to save for their children, said Eleanor Blayney, consumer advocate for the CFP Board.
Fifty-three percent of parents who have saved for their children's college costs have less than $10,000 saved for their oldest child, and most have not started to save for any additional children they may have, the survey found.
The most popular savings vehicle for 61 percent of parents was a savings account; 40 percent are using a 529 plan, and 33 percent are using investments.
“Many parents may not be effectively investing for college," Blayney said. Thus they are missing out on tax advantages and the higher returns from 529 plans and investments.
The College Board reports that the average undergraduate tuition, fees, room and board for the 2013-2014 academic year totaled $18,391 for public, four-year institutions for in-state students and $31,701 for out-of-state students. The tuition was $40,917 for private, nonprofit colleges and universities.
“You really need to have a piecemeal plan and deploy a variety of measures to make it possible,” said Blayney. That means being realistic about college choices. Students have to consider "community college, commuting to college or working through college, and getting smart about financial aid, loans, grants and scholarships.”
According to the survey, 56 percent of parents hope to qualify for, or are “counting on,” financial aid to send their children to college.
Forty-five percent expect their children to receive merit aid as additional financial support for college expenses. And 13 percent expect athletic scholarships.
“Information is one of your biggest resources," Blayney said. "The more information parents have about what’s involved, the better able they are to manage and find a solution.
“Funding college expenses is complex," she added, "and you may need professional advice."