Parents of high school children say the amount of their kids' total college education costs that they can cover has dropped nearly 27% from last year, according to a Fidelity Investments survey.
Parents surveyed with children in high school now say they can afford to cover 11% of those total costs, down from 15% in 2008, according to Fidelity's third annual College Savings Indicator study released today.
But Fidelity's study did find that more parents with children aged 18 and younger are saving: 63% say they already have money saved vs. 60% last year. These parents are on track to cover 18% of their children's projected future college expenses, down from 21% in 2008. Parents with 529 plans were faring better; they're projected to cover 36% of the total costs.
However, even though parents are saving more, fewer think they'll get a student loan large enough to cover remaining costs (43% in 2009 vs. 23% in 2008), and many are looking at ways to earn more income and control costs. In particular, more parents plan to have their child live at home and commute (50% in 2009 vs. 44% in 2008 and 38% in 2007). Also more parents say they will delay retirement to help pay for their kids' college education costs (43% this year vs. 35% last year). Among parents with high-school-aged children, the study found more have decreased the amount they are saving for retirement (15% in 2009 vs. 10% in 2008) to cover college costs.
Fidelity found that parents who work with financial advisors report having received specific college-savings guidance on how to pay for college in the current market environment (62%), including: adjusting investment strategies (32%), exploring supplemental funding sources (25%) and using rewards programs to boost savings (27%). Yet many of these parents (58%) who use an advisor wish they could get more assistance on their college-related financial decisions, with the top three areas of need being the grant process (22%), financial aid process (19%) and strategies for efficient college savings (18%).
The survey did show that students who graduated in June feel they should be shouldering some of the burden: 90% of those respondents said they should help pay for at least some college costs. Those students said they expect to help their parents pay for college with two main income sources-their own savings (42%) and working while in school (76%).
An independent research firm, Research Data Technology, conducted the online survey this year of 2,300 parents nationwide with children 18 years old or younger who are expected to attend college.