NEW YORK (MainStreet) — Families are finding new ways to cover college costs and it means sacrifices and more work for parents, according to a new survey from Fidelity Investments.
The survey says parents currently have only about 16% of college costs put away, compared to the 24% they had saved in 2007, the first year in which Fidelity conducted its survey. Even to get to this point, the survey found that families are making shared sacrifices in order to pay for college.
Forty-eight percent of parents will ask their child to live at home while in school, a 10 percentage points increase from 2007. Additionally, 18% of families are having a non-working spouse go back to work to foot the bill, up from 11% in 2007, while 17% of parents are taking a second job, up from 11% in 2007.
The survey found that more parents are starting to save when their children are in preschool, despite current financial pressures. An increasing number of parents are also using a dedicated account, such as a tax-protected 529 college savings plans to put money away for their children’s college education.
“Families are planning earlier and saving more efficiently, yet with college costs increasing 26% in a five-year period, saving for college will continue to be a challenge,” Joseph Ciccariello, vice president of Fidelity Investments College Planning said in a press release.
Fidelity’s survey is based on online interviews with more than 2,300 parents nationwide with household incomes of $30,000 a year or more. College cost estimates were drawn from the College Board’s Trends in College Pricing 2010.
How else can parents start saving for their kids’ college tuition? MainStreet has five alternatives to the 529 plan you should know about.