Americans College Choices Limited Despite Early Saving
As another class of college students graduates with enormous student loan debt, parents are also feeling the pinch. Three–quarters of Americans say the cost of higher education will limit where their children can go to college, according to a COUNTRY Financial survey. And even though most say they should start saving early for college, few take advantage of plans which could save them thousands of dollars.
Eighty–one percent of Americans say they should start putting money away for college before their kids are born or before they get to elementary school. However, less than one–quarter (24 percent) use Coverdell Savings Accounts, 529 plans or tax free gift programs to help save for their children’s college education.
“While Americans recognize they should start saving very early, it’s unfortunate that many do not use the various tax–advantaged vehicles available,” says Keith Brannan, vice president of financial security planning for COUNTRY Financial. “These kinds of savings plans can be invaluable tools for parents who want to stretch their savings dollars, especially in these tough economic times when loans are more difficult to get.”
Majority see return on college investmentMay 20, 2008
While the cost of college education continues to rise, 81 percent still believe it is a good financial investment, up from 78 percent in 2007. Sixteen percent of men compared to just five percent of women say it is not a good investment.
Americans’ savings priorities shiftMay 20, 2008
Forty–seven percent now say saving for their retirement is more important than saving for their child’s education. This is up from 43 percent in 2007 when Americans were equally split on these two financial priorities. Young parents continue to be more likely to put college education savings before their own retirement (62 percent).
“It is encouraging to see more people realizing the importance of retirement over saving for college compared to last year,” adds Brannan. “Americans shouldn’t sacrifice their own retirement savings in order to finance college. Planning ahead, utilizing tax–advantaged savings vehicles or talking with a professional to help prioritize savings can help you do both.”
Important tips to follow:May 20, 2008
- If you haven’t saved enough for your child’s college, consider cost–cutting options. Attend a lower–priced school the first two years, look into financial aid or consider commuting instead of living on campus.
- You might be able to receive significant tax credits while your child is in college. The Hope Scholarship Credit could provide $1,800 a year for the first two years of school. The Lifetime Learning Credit could give back up to $2,000 per year. Talk to a financial advisor to see if you qualify.
- If your child has savings bonds, use them. If you put them towards qualified educational expenses, you won’t pay a tax on the interest the bonds have accumulated over the years.
The COUNTRY College Funding survey is based on a national telephone survey of 1,196 Americans who expect to be responsible for paying for a child’s education, and is compiled by Rasmussen Reports, LLC, an independent research firm. The margin of sampling error for a survey based on this many interviews is approximately +/- 3 percentage points with a 95 percent level of confidence.
About COUNTRY Financial
COUNTRY Financial serves about one million households and businesses throughout the United States. It offers a full range of financial products and services from auto, home and life insurance to retirement planning services, investment management and annuities.