Worries about saving for college haven't stopped parents from continuing to set money aside for higher-education costs.
Six in 10 parents surveyed said that they strongly believed that if tuition costs kept skyrocketing, college would be unaffordable for most families, according to a survey released today by OppenheimerFunds Inc.
Despite the economic crisis, however, just 26% of the 1,000 parents of pre-college-age children surveyed said that the future cost of college had discouraged them from saving. What's more, 60% of parents surveyed said they hadn't put saving for college on hold, 60% said that they hadn't reduced the amount that they were saving for college, and 92% said that they hadn't withdrawn funds from a college savings plan.
Most parents' savings plans, however, fall far short of the expenses that they are likely to face, the survey found. Of those polled, for example, 77% with pre-college-age children said that they had saved less than $20,000 for college, 62% said that they had saved less than $10,000, and 43% said that they had saved less than $5,000. Twelve percent said that they had saved nothing at all.
Two-thirds of parents who used financial advisers said that they wanted to discuss saving for college with them over the next year.
“It's clear that many Americans consider their adviser to be a valued partner ... and it's a way for advisers to keep growing their own business as well,” said Donna Winn, president and chief executive of New York-based OFI Private Investments Inc., a subsidiary of OppenheimerFunds, which is also based in New York.
Although 61% of parents said that they were at least somewhat familiar with Section 529 college savings plans, just 24% of parents said that they used a plan.
Mathew Greenwald & Associates Inc. of Washington conducted the telephone survey in February.
In an effort to promote awareness of college savings plans and provide information on strategies to save for college, OppenheimerFunds, which manages eight plans in four states, has launched an educational website, collegewithinreach.com.
Last month, Newton, Mass.-based Upromise Investments Inc. launched 529.com, which also provides information on such plans.
The New America Foundation, a Washington think tank, and the Center for Social Development at Washington University in St. Louis, also recently launched the College Savings Initiative, a joint venture to study and promote 529 plans, as well as financial-aid programs.
On June 1, Jacqueline “Jackie” Williams will become director of the initiative when she leaves her job as executive director of the Ohio Tuition Trust Authority in Columbus.
“Through the initiative, I'll be able to work to extend benefits of saving for college to a broader economic group and to help moderate- and low-income families,” she said.
Ms. Williams is also spokeswoman for the Lexington, Ky.-based College Savings Plans Network, an industry association of state 529 plan administrators, and is a former chairwoman of the organization.
“She has done a great job and will be sorely missed,” said Dan Ebersol, CSPN chairman and director of the Georgia Office of Treasury and Fiscal Services in Atlanta.
“[Ms. Williams] has advanced the interests of the industry on the program level in Ohio and on the national level as a public spokesperson, talking to members of Congress and testifying before congressional hearings,” said Joe Hurley, president and chief executive of Pittsford, N.Y.-based Savingforcollege.com LLC
The initiative held its first research round table on tax policy and 529s last month and will hold a meeting on financial aid and 529 plans June 12.
E-mail Charles Paikert at [email protected].
