Mom and Dad Okay With Paying for College During a Pandemic - But They Have Limits
Fidelity is out with its latest College Savings Indicator Study.
With the ongoing pandemic and the general confusion surrounding the college experience these days, it’s a good time to get a grip on college costs, and in particular, how engaged student and their parents are in paying for college in 2020.
While families are saving more than they ever have for college (likely because college is so expensive) well over two-thirds of parents say they’re deeply concerned over how the pandemic is negatively impacting their savings strategies.
In fact, 32% of parents surveyed by Fidelity aren’t even sure what college will cost by the time their children enroll. “Despite these hurdles, only 9% of parents plan to decrease contributions to their children’s college savings this year,” Fidelity states.
Parents and children also “share anxiety” about educational disruptions this fall, with two-thirds agreeing that in-person instruction is the best way for their children to learn, an unlikely scenario for many students this year, Fidelity reports.
But make no mistake, on-campus decisions matter to students and families.
“If distance learning becomes more common down the road, 36% of parents say they will have their child attend a less expensive college since they would not want to pay full tuition for virtual classes,” Fidelity reports. “Despite these concerns, the study reveals 77% of parents agree college is worth its cost.”
The good news is that mom and dad have made great strides as college savers over the years.
The Fidelity study notes that a record-high 78% of parents have already put money away for college. That’s “substantially higher than the 58% who had started saving when the study first began in 2007,” Fidelity states. “However, parents still fall short on funding their college savings goals; while parents 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).”
Parents who need help can tap into a financial advisor for guidance on long-term savings plans. While Fidelity certainly has a stake in parents using a financial professional to ride herd on a college savings campaign, the data says families prefer professional college financial advice.
According to the report, approximately eight-in-ten people with a financial advisor say working with a professional provides them greater peace of mind about the college planning process, and 71% say they are closer to their goal thanks to their advisor.
“Whether college is one, five, or 10 years from now, it’s important advisors and families work together to create and feel confident about their college saving plans,” said Ron Hazel, senior director of Fidelity Advisor 529 and individual retirement products. “Communication is key in helping families understand their goals and expectations for college, and it’s encouraging to see advisors are helping start the conversation."
"With many families feeling particularly uncertain about the future at this time, advisors can initiate important discussions with families about what they envision for their college experiences, and how that fits with their college savings plans," Hazel says.