Exorbitant college prices stymie parents

The ability of parents to save for their children’s college tuition has declined since last year, according to a study released today by Fidelity Investments of Boston.
OCT 01, 2008
By  Bloomberg
The ability of parents to save for their children’s college tuition has declined since last year, according to a study released today by Fidelity Investments of Boston. The College Savings Indicator, an online survey of 3,000 parents with college-bound children, found in its August survey that parents are projected to meet only 21% of the total cost of their children’s college tuition, representing a 3-percentage-point decrease from last year. The cost of college is estimated at $120,000 for today’s high school seniors. The economy is having a significant impact on savings, with 60% of those surveyed citing daily expenses as a barrier. As a result, 34% said they have decreased the amount they are saving, or stopped saving completely, for college. In addition, 35% reported they may need to delay retirement to pay for tuition. The housing crisis is also having an impact. A full 24% said that the decline in housing values will have an impact on their ability to tap home equity to pay for college. A full 14% said they expect to take a personal loan. Also, 62% said they plan to rely on student loans. That is an increase over last year’s 53%. But 32% said they don’t believe they can get a loan for the amount they need. A full 74% said they had not sought any financial guidance or education about savings options. More advisers are suggesting a 529 savings plan, the study found. Thirty-six percent of the parents who had sought advice said their adviser suggested opening a Section 529 college savings account, up from 30% last year. Despite the challenges cited, 60% said they have already started saving for the future. As of Aug. 31, Fidelity had more than $3.2 trillion in assets under custody, including managed assets of $1.5 trillion.

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