WASHINGTON, Aug. 14, 2012 /PRNewswire/ -- More parents are saving for their children's college education this year over last, and more are using 529 college savings plans to do so, says the sixth annual State of College Savings Survey of 800 parents across the country. www.collegesavingsfoundation.org
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majority of these savers also use 529 college savings plans, where earnings grow Federal income tax free when they are withdrawn for college tuition and other qualified higher education expenses.
"Parents are committed to saving for their children's future and are using sound strategies to reach their goals," said Roger Michaud, Chair of College Savings Foundation, a leading nonprofit helping American families save for their children's college education.
529 college savings plans are assuming a greater role in parent saving. Roughly one-third (30 percent) of parents surveyed own a 529 college savings plan, up from 24 percent last year, and those who do cite tax-free benefits and the cost of college as leading motivations.Despite this uptick in parent saving, students are being pressed to contribute more than they have in the past: 69 percent of parents expect their children to contribute financially, up from 62 percent last year. The most popular way to help with college costs? Forty-three percent of parents say, "Get a job." The cloud of debt also looms far over the students' futures: 69 percent of parents expect that they or their children will be paying loans off for at least five years after graduation. Nearly half, 49 percent, of parents anticipate that they or their children will take out education loans to finance some portion of college; and 41 percent expect education loans to be their number one source of financing, with an emphasis on student loans. While most parents – 88 percent – said that it was Very Important or Important that their children attend college, one in five (20 percent) of all parents said they could not afford a four-year private school.