How much are parents willing to cover for their kids’ college?

New research from Northwestern Mutual offers a revealing overview of how American parents are planning to finance their children's college education.

According to the 2024 Planning & Progress Study, a vast majority of parents (95 percent) saving for their children’s higher education expect to cover more than half of the college expenses.

The study highlighted a split in how costs are distributed, with 36 percent of parents intending to pay the full cost, while 64 percent anticipate that their children will contribute to some extent.

As per the research, about 37 percent of parents expect their child's contribution to be between one-quarter and one-fourth of the total cost, with another 22 percent forecasting a child's share to be between one-fourth and half.

Christian Mitchell, chief customer officer at Northwestern Mutual, emphasized the importance of strategic planning in this area.

"For many parents, saving for their kids' college expenses is priority number one," Mitchell said in a statement. "Each family should determine what feels right for them – but they need to act intentionally. Otherwise, the window to save for college costs may close – and fate will dictate how much parents and kids must contribute."

"It's also important to remember that college loans exist, but there is no such thing as a retirement loan," he added. "If parents can't afford life in retirement, that unexpected financial burden may fall on their kids' shoulders."

The study also explored the broader context of financial preparedness among Americans.

It found that 40 percent of Gen Z respondents are currently saving for college, either for themselves or a family member, with the average expected total cost around $77,300, which they expect to pay off by age 45.

Additionally, personal debt levels have seen a slight increase year-over-year, with 66 percent of Americans holding some form of debt, averaging $22,713. Reflecting that, the study noted a continued focus on debt repayment over savings, with 64 percent of adults focused on paying down debt.

The survey also revealed a good news-bad news picture on rainy-day saving. While 60 percent of Americans have established an emergency fund, with the average saved amount being $25,500, only 53 percent reported that their savings would cover more than six months of expenses.

"It's important to expect the unexpected, and to plan for it," Mitchell remarked. "Alongside insurance, an emergency fund helps to lay the foundation for financial security."