NEW YORK (BankingMyWay) -- Parents have a dollar figure in mind when saving up for college and it's a pretty big one. That goal is to stash away $405 every month, according to Fidelity Investments' 2014 College Resolutions Study.
That's more than the average monthly bills for electricity, phone and groceries for most U.S. households, and it would be unthinkable to the average family 20 or 30 years ago.
According to Statisticbrain.com, the average cost of one year of college back in 1980-81 was $3,101. For 2012-13, that rose to $19,344, and to more than $32,000 for private colleges.
Even with the cost of paying for college rising substantially -- at a 5.2% rate above and beyond the rate of inflation in the past decade, according to CollegeBoard.com parents are grimly determined to save for college.
The Fidelity study says 85% of U.S. parents put saving for college among the "top three" financial priorities, and 34% say it's their "top priority" in 2014.
Some other data from the study:
- This year, 80% of families will save either as much or more than they did for college last year.
- 58% have a "financial plan" to help manage their savings programs.
- "Most" parents say their magic number for monthly college savings averages out to $405 per month, Fidelity reports.
Whether it's because they want to or have to (and probably a combination of both), college funding programs are a New Year's resolution parents are adamant about maintaining.
"For many parents, saving for college is an area of focus throughout the year, but the New Year is an ideal time for families to reassess their finances, set new savings goals and priorities and establish a college savings plan," says Keith Bernhardt, Fidelity's vice president of college planning. "While many resolutions are quickly abandoned because they aren't as specific and attainable as they could be, we are encouraged that families are setting concrete college savings goals and developing actionable plans that will help them keep these resolutions."
The most popular form of college planning, from an investment viewpoint, is the 529 plan, which offers investment growth and tax savings for college-saving families. Half of parents in the study say they already have one up and running, and half of that group say they will add more money into those plans than they did last year.
Another key trend: More parents are taking cash gifts for birthdays, holidays and graduations and steering them into college funding, giving kids more of a stake in their college education (whether they like it or not); 37% of parents "re-route" cash gifts to college savings, and 41% enlist grandparents into the family educational savings fund.
Clearly, parents are pulling out all the stops in funding their kids education. The lesson here? If they don't do it, who else will -- especially when the average college bill costs $19,000 annually?
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