Young moms and dads, many of whom are paying off their own student loan bill, plan to deal with, typically, 75 % of their kids's college costs, compared with 61 % for Generation X parents and 60 % for baby boomer moms and dads, according to a new research on college savings from Fidelity Investments. And a huge 43 % of millennials aim to pay for the complete cost of their children's college education compared with only 32 % of Gen X and 27 % of boomers. Amazing!
As a baby boomer i was shocked to see how serious today's parents are taking their responsibilities.
Having lofty goals is fantastic, however it matters more if college savers can walk the talk. Overall, parents are on track to cover only 27 % of their college funding objective by the time their children reach college age, down 3 percentage points from last year's study. This from a survey of 3,340 families with children 18 years old and younger and a yearly household income of a minimum of $30,000.
However it's not all wishful thinking on the part of millennial moms and dads. On average, they have 29 % saved towards their college financing goal compared with 25 % for Gen Xers. Millennial moms and dads are more likely than other generations to use a 529 college savings plan, save monthly, raise their contributions every year and begin saving when their kids are 5 years old or younger.
Millennial parents' own student debt experiences have actually affected college savings decisions for their children. Eighty-seven percent surveyed by Integrity stated that their student debt is inspiring them to help their kids save more for college. Of the millennial parents evaluated, 40 % had student loan debt with a typical balance of $20,800 and 56 % of those parents are still repaying their loans.
Parents Taking Their College Saving Plans Seriously
Aided by the enthusiasm of millennial parents, the percentage of households saving for college is at an all-time high, with 67 % of households surveyed announcing that they have started saving for college. That figure is up from 63 % in 2014 and 57 % when the survey first conducted a college cost savings study in 2007.
The 529 plans had a noticeable influence on households' college savings. Those with 529 plans had actually saved an average of $34,900 for college compared to an average of $26,500 saved by families without a 529 plan. While the 529 plan cost savings average is at a record level, there's still a ways to go. That amount is just sufficient to pay for one and a half years of in-state tuition, fees, room and board at a public, four-year university or 80 % of one year of expenses at a private college, according to the College Board.
Assets in 529 plans hit a record amount of $246.2 billion in July, a 6.5 % year-over-year increase, according to the College Savings Plans Network, an association of the state-sponsored plans. It was announced that 37 % of the parents surveyed have a 529 plan, up from 29 % in 2014.
Better Saving Vehicles Increase College Saving
Saving for college is about awareness and discipline. It suggests parents begin their college fund as early as possible. On average, parents report that their youngster was 7.2 years of ages when they started to save for their college.
With Americans carrying a record $1.2 trillion in student loans, it would be wise to move college funding from a debt model to a savings model.
Hopefully millennial parents will continue to save for college. This is refreshing news because they have been harmed by their large college debt an don't wish that mistake to repeat with the next generation