Fidelity® study finds number of families
saving for college at all-time high, yet on track to meet just one-third
of their college savings goals
Investments® today announced the results of its 7th
annual College Savings Indicator study, which finds that while
families are still behind in their college savings goals, more are
taking action to save and plan ahead. When asked to grade their college
savings progress, parents gave themselves a B-minus.
College Savings Progress Report:
Families Saving at All-Time High - Sixty-nine percent of
families report they have started saving for college, an all-time-high
since the inception of the study in 2007 (up from 66 percent in 2012,
and 58 percent in 2007). College savings contributions also are up,
with parents putting away an average of $5,000 last year.
Parents Planning and Using Dedicated College Savings Accounts -
Saving for college is a growing priority with 61 percent of parents
reporting they have a financial plan in place and 37 percent utilizing
a dedicated college savings account - such as a 529 plan - to help
reach these goals.
To "Ace" College Savings, Parents Still Have Work to Do - While
there is an increase in positive saving behaviors, the study finds
that on average parents plan to pay for 62 percent of the total cost
of college, yet are on track to cover just one-third (34 percent) of
that savings goal.
Fidelity's business data supports the positive behaviors reported in
this year's study. The firm has seen a 22 percent increase in the number
of new retail 529 college savings accounts opened during the first half
of 2013, compared with the same period last year. Additionally, average
retail account balances are up 8 percent from last year.
"While a B-minus is a passing grade, parents need to make sure they are
considering the total cost of college. Families can make some simple
adjustments to help improve their college savings 'grades' and keep
themselves on track toward their goal," said Keith Bernhardt, vice
president of college planning at Fidelity Investments. "This year's
findings are consistent with what we hear from our customers - parents
recognize the importance of defining their college priorities and
setting a strategy to save regularly. If families commit to saving,
planning and talking about college priorities early, they are better
prepared to meet college costs and help their children avoid significant
student debt in the future."
The Rising Cost of College Prompts Families to Take Action
According to The College Board, the average annual cost of a four-year
college in 2020 will be $46,3681, a 38 percent increase
compared to the current fees. Given such projections, it is no surprise
that more than half (55 percent) of parents are concerned their children
will have to make compromises in the quality of their education due to
increasing costs. While the majority of parents do not want to burden
their children with significant student loan debt, 43 percent do not
believe they will be able to secure a student loan to cover the full
amount needed to pay their children's college bill. To address these
concerns, many parents continue to take proactive measures, including:
54 percent expect their kids to take online courses for credit
54 percent intend to ask their child to work part-time during school
to help pay expenses
50 percent will ask their kids to live at home and commute
40 percent will encourage their child to attend a public school
23 percent will encourage their child to graduate in fewer semesters
Financial Professionals Mediate Delicate Conversations, and Create
College Financing Strategies
One-third (33 percent) of the parents in the study work with financial
professionals, and tap them for a wide range of college-related
insights, ranging from tax efficient savings to researching schools.
Parents also have been tapping their advisors to help mediate and guide
sometimes delicate college-planning conversations with their children.
Of parents who work with financial professionals, one in ten (11
percent) had their advisors meet with their child to talk about college
financial discussions, and an additional 45 percent of parents used
materials provided by their financial professionals to help them
facilitate college planning discussions with their children.
"Paying for college is a stressful topic, and adding a third-party
financial professional may help take some of the emotion out of these
highly-charged, yet important conversations," said Matt Golden, vice
president of college savings for Fidelity Financial Advisors Solutions.
"For many parents, working with a financial planner helps give them the
confidence that they can reach their college savings goals."
Steps to Earning a Better Grade: Initiate College Savings
Conversations and Create Plans
By taking steps early to prioritize college savings and planning,
families can earn high marks in reaching their long-term college goals.
Save early, save often: Opening a dedicated college savings
account - such as a 529 plan - can help families save and stick to
their goals. In fact, 88 percent of 529 plan owners have a financial
plan in place to meet their college savings goals.
Start conversations now: Parents who first started talking to
their kids about the concept of paying for college before the age of
10 were more likely to have started saving (93 percent), compared to
those who first discussed the topic when their child was 10 or older
Identify teaching opportunities: When children are old enough
to understand earning an allowance, discuss saving for college and the
importance of establishing financial goals. Twenty-nine percent of
parents report asking their children to put aside some of their own
savings for college, with a typical starting age being between 12 and
Get more detailed as children age: As children approach college
age, have detailed discussions about the total cost of college and the
implications of college choices. Sixty-nine percent of families with
older children (age 15+) who had these conversations took action to
address how those issues would affect earning potential, job prospects
and future student loan debt.
Debunk misinformation about saving and future aid: Fifty-one
percent of parents believe that saving too much will hurt their
child's eligibility for financial aid. In reality, today's financial
aid system focuses on income rather than savings in a dedicated
college account. The more a family saves, the less they may need to
borrow; therefore they will have more options when the time comes to
send their child to college.
Seek help from financial professionals: Consider working with a
financial professional for added guidance. Ninety-two percent of
families working with a financial professional feel confident they
will reach their college goals.
Fidelity's College Savings Resource Center Can Help Keep Families on
Track with Saving
For families looking for assistance at any stage of their college saving
College Savings Resource Center provides a range of online planning
tools and calculators, a broad overview of savings options and
strategies, as well as resources to learn more about how to search and
apply for financial aid and scholarships. Also available in the College
Savings Resource Center is a series of Viewpoints
articles focused on college savings strategies and decision making,
providing expert points of view and actionable steps that families can
take to stay focused on their college goals. Examples include:
Fidelity offers complimentary access to dedicated college planning
representatives, as well as in-person guidance and college planning
seminars at 182 investor
Fidelity also provides financial advisor clients with 529 plan
information, marketing support and online tools such as the 529 State
Tax Deduction Calculator and the College Savings Planning tool.
Financial advisors can get more information at advisor.fidelity.com/529
About the 2013 Fidelity College Savings Indicator
As part of the study, Fidelity conducted a survey of parents with
college-bound children of all ages. Parents provided data on their
current and projected household asset levels including college savings,
use of an investment advisor and general expectations and attitudes
toward financing their children's college education. Using Fidelity's
proprietary asset-liability modeling engine, the company was able to
calculate future college savings levels per household against
anticipated college costs. The results provide insight into the
financial challenges parents face in saving for college. Data for the
Indicator (number of children in household, time to matriculation,
school type, current savings and expected future contributions) were
collected by Research Data Technology, an independent research firm,
through an online survey of more than 2,500 parents nationwide with
children aged 18 and younger who are expected to attend college. The
survey respondents had household incomes of $30,000 a year or more, and
were the financial decision makers in their household. College costs ere
sourced from the College Board's Trends in College Pricing 2012. Future
assets per household were computed by Strategic Advisers, Inc. (a
registered investment adviser and wholly owned subsidiary of FMR LLC).
Within Fidelity's asset-liability model, Monte Carlo simulations were
used to estimate future assets at a 75 percent confidence level. The
results of the Fidelity College Savings Indicator may not be
representative of all parents and students meeting the same criteria as
those surveyed for this study.
About Fidelity Investments
Fidelity Investments is one of the world's largest providers of
financial services, with assets under administration of $4.3 trillion,
including managed assets of $1.8 trillion, as of July 31, 2013. Founded
in 1946, the firm is a leading provider of investment management,
retirement planning, portfolio guidance, brokerage, benefits outsourcing
and many other financial products and services to more than 20 million
individuals and institutions, as well as through 5,000 financial
intermediary firms. For more information about Fidelity Investments,
The UNIQUE College Investing Plan, the Fidelity Advisor 529 Plan, the
U.Fund® College Investing Plan, the Delaware
College Investment Plan and the Fidelity Arizona College Savings Plan
are offered by the state of New Hampshire, MEFA, the state of Delaware,
and the Arizona Commission for Postsecondary Education, respectively,
and managed by Fidelity Investments. If you or the designated
beneficiary are not a New Hampshire, Massachusetts, Delaware, or Arizona
resident, you may want to consider, before investing, whether your state
or the designated beneficiary's home state offers its residents a plan
with alternate state tax advantages or other benefits.
Units of the portfolios are municipal securities and may be subject
to market volatility and fluctuation.
Research Data Technology is not affiliated with Fidelity Investments.
Guidance provided by Fidelity is educational in nature, is not
individualized and is not intended to serve as the primary or sole basis
for your investment or tax-planning decisions.
Fidelity, Fidelity Investments, Fidelity Advisor Funds and the
Fidelity Investments & Pyramid Design logo are registered service marks
of FMR LLC.
The third party marks appearing herein are the property of their
Please carefully consider each plan's investment objectives,
risks, charges and expenses before investing. For this and
other information, contact Fidelity or visit fidelity.com for a free
Fact Kit or request a free Offering Statement from your advisor or
through advisor.fidelity.com. Read it carefully before you
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Fidelity Brokerage Services LLC, Member NYSE, SIPC
Salem Street, Smithfield, RI 02917
Fidelity Investments Institutional Services Company, Inc.,
Salem Street, Smithfield, RI 02917
© 2013 FMR LLC. All rights reserved.
1 College Board Trends in College Pricing, 2012-2013. Data is
straight average of four-year public and private school costs. Fee for a
four-year college in 2012-2013 is $33,621.
Deborah Pont, 401-292-5318
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