Student debt drives parents toward 529 plans, Fidelity finds

The share of parents saving for their kids' college schooling has gone significantly up with a strong majority pointing to their own experience with student debt as a driver, according to new research from Fidelity.

Fidelity's biennial College Savings Indicator found that 84% of parents have started saving for their children's college education, up sharply from 74% in 2024. Nearly 9 in 10 parents said their own student debt is motivating them to help their kids save more aggressively for school.

The tradeoffs aren't theoretical for the parents surveyed. More than half, 55%, said paying off their own loans delayed them from starting to save for retirement, and 48% said their debt held back their ability to save for their children's education.

Read more: Student loan burden is rewriting financial priorities, new data shows

More families are opening 529 accounts

The survey found 41% of parents now plan to cover the full cost of their children's college education, up from 37% in 2024. Even parents who plan to cover only part of the cost are budgeting for more of it: 55% on average, up from 52% two years ago, while their expectations for how much their children will cover on their own have dropped to 38% from 41%.

That shift is showing up in account ownership. Forty-five percent of families have opened a 529 plan, up from 39% in 2024, and those families are saving substantially more than parents without one – $45,752 on average, compared with $24,387 for families without a 529.

Parents with a 529 account are also on track to meet 57% of their savings goal, versus 48% for those without one, a gap Fidelity said reflects the discipline that comes with a dedicated account.

Read more: Which 529 savings plans set the gold standard in 2025?

"The data consistently shows that families who choose to save in a dedicated college savings account are able to make more meaningful progress toward their goals," said Amanda Verstegen, senior vice president and head of savings and lending at Fidelity. "Establishing an account like a 529 early on can give families a powerful leg up that can help them turn aspirations into reality."

Awareness of 529 accounts still lags their growing use, a gap Edward Jones data on public understanding of 529 plans also identified, suggesting advisors have room to bring more clients into the conversation.

Retirement and college savings goals are colliding

Fidelity's findings point to advisors playing a growing role in helping clients sequence competing goals. Parents in the survey reported saving roughly $9,000 a year toward college on average, but only 44% of those who plan to cover at least some of the cost and have already started saving are on track to meet their goals. On average, parents hope to cover 72% of their child's education and are on pace to reach 53% of that target.

Among parents who have not yet started saving, the top barriers were other, more pressing financial concerns, cited by 68%, followed by feeling too overwhelmed to begin, at 44%, and uncertainty about how much to save, at 36%. Those numbers suggest an opening for advisors to walk clients through 529 mechanics, contribution timelines, and how the accounts interact with broader retirement planning.

Parents are also weighing how artificial intelligence could reshape the return on a college degree. Seventy-three percent said they believe AI will influence which major their child chooses, and 49% think the technology will make some jobs harder to get or obsolete, even as most parents continue to believe a college education is worth paying for.