Sallie Mae’s “How America Saves for College 2013” study finds that despite rising college costs, fewer American families with children under age 18 save for college (50%) than did just two years ago (60%).
Based on a nationally representative survey of parents of children under age 18, the study found that:
While nearly all parents believe college is an investment in their child’s future, only one-third have a plan to pay for college.
When asked to describe their feelings about saving for college, parents’ top answers were overwhelmed, annoyed, frustrated, scared, or that they don’t like thinking about it at all.
Among those not saving, 47 percent cite a barrier other than money. Top reasons included thinking that children would be awarded enough financial aid to cover the cost of college, children are too young or too old, uncertainty about which savings option to use, procrastination and feeling it is the child’s responsibility to save and pay for college.
Starting to save is most frequently prompted by major milestones such as a child’s birth (34%), starting school (24%), or learning about college costs from friends and family (20%).
Slightly more than one quarter (27%) of parents who are saving for college use a 529 college savings plan. However, more parents save for college using general funds or CDs (42%) and may miss out on tax incentives offered by a 529 account.
Here is an interesting visual representation of study results of those families who are saving: