Kids expect parents to cover their college costs, but try as they might, parents might not be able to meet those expectations. That creates for a difficult and often tense situation, said Judith Ward, senior financial planner at T. Rowe Price (TROW - Get Report) .
"Kids generally don't have a clue and parents need to make their expectations clear otherwise it can create an awkward situation later on," said Ward.
According to a recent T. Rowe Price study on Parents, Kids and Money, 62% of kids agree with the statement, "I expect my parents to cover the cost of whatever college I want to go to." But parents may not be able to meet kids' expectations with only 35% of parents saying they will be able to cover at least most of college costs, including 12% of parents who indicated they will be able to pay the entire cost of college.
Parents are willing to work more to cover college costs to cover the shortfall. T. Rowe's survey said 76% of parents would be willing to delay their retirement and 68% would be willing to get a second or part-time job to pay for kids' college education.
"Parents need to put retirement savings ahead of college because they need to look out for themselves first," said Ward. "They don't want to be a burden to their kids later in life."
As to how they plan to save for retirement, millennials are less likely to use 529 college savings accounts. Nearly half as many Millennials are saving for their kids' college in a 529 account (22%) compared with Gen Xer (42%) and Baby Boomer (42%) parents.
Parents using 529 accounts are less likely to spend college savings on other things. The survey said 38% of parents saving for their kid's college in a 529 account have used their college savings to pay for other expenses, compared to 49% of parents who are not using a 529 account to save for college. Common reasons for taking money out of college savings including paying for vacation (13%), taxes (13%), health care (12%), home repair or renovation (12%), and paying off debt (12%).