Most parents agree that the value of a college education is worth the cost. But they are also concerned about the impact of Covid-19 on their ability to save for it, and nearly one-third of parents are not sure what college will cost by the time their children enroll, according to a study by Fidelity Investments.
The 2020 College Savings Indicator Study found that as American families continue to grapple with how to pay for rising higher education costs, 71% of them are worried about Covid-19’s impact on their savings plan.
Meanwhile, two-thirds of parents believe that in-person instruction is best for their child’s learning.
More than one third (36%) of parents said if distance learning becomes more common down the road, they will have their child attend a less expensive college since they would not want to pay full tuition for virtual classes.
Melissa Ridolfi, vice president of retirement and college leadership at Fidelity Investments, said family finances are stretched in these challenging times and many aspects of their lives, including college plans, are thrown into question.
“The pandemic college experience—which may mean learning virtually—is likely not what students and parents initially planned for when they began saving," she said in a statement. "While this new environment has many reconsidering where and how they use college savings, parents continue to recognize the value of a college education.”
The Fidelity study also found the number of parents saving for college is at a record high 78%. That figure was 70% in 2018 and 58% in 2007, the first year of the study. But parents still fall short on funding their college savings goals. Namely, while they hope to pay for 65% of their children’s college education, they are only on track to cover 33% of that goal (up from 28% in 2018), the study said.
The study suggests that families can better prepare for college savings by setting aside money in a dedicated 529 savings account. It noted that 529 owners are on track to cover 46% of their college savings goals, while those without a 529 are on track to meet only 24% of their goals. Nearly half (48%) of parents surveyed have opened a 529 college savings account, a record high since the study began over a decade ago.
Also, working with a financial professional can play an important role. The study said about eight in 10 people with a financial advisor indicated that working with a professional provides them greater peace of mind about the college planning process, and 71% said they are closer to their goal thanks to their advisor.
Data for the 2020 College Savings Indicator Study was collected by Boston Research Technologies, an independent research firm, via an online survey of 1,790 families nationwide with children ages 18 and younger who are expected to attend college. The survey was conducted June 5 through July 2, 2020