On Friday, we offered 5 Steps to Dramatically Reduce the Cost of College. But the more time you have to save, the better. The good news is more parents are recognizing that.
Here’s a key takeaway from a new report by the nonprofit College Savings Foundation…
The survey found that 45 percent of parents had saved more than $5,000 per child – up from 40 percent last year and the highest level since 2007, when 49 percent had saved that much. The majority of these savers also use 529 college savings plans, where earnings grow federal income tax-free when they are withdrawn for college tuition and other qualiﬁed higher-education expenses.
Other interesting tidbits? Nearly three in four expect their kids to contribute, with most saying “get a job” to do so.
Parents with financial advisers are twice as likely to have already tucked away five grand per kid. And those with 529 plans are “dramatically more successful savers” – more than four times as likely to have saved between 25 and 50 grand per kid as parents without.
Despite planning, most parents (69 percent) expect themselves or their children to be dealing with student loans for at least five years after college.
We’ve recommended 529 plans as a gift to teach kids about money and a smart way to use your tax refund. For more information on the workings of these plans, also known as qualified tuition programs, check out Savingforcollege.com.