RESTON, Va., May 29, 2009—Despite the ailing economy, more than half (52 percent) of parents are saving the same amount or more for college, according to a national study of parents from Sallie Mae and Gallup on “How America Saves for College.” In addition, parents overwhelmingly expect their children to pursue higher education (92 percent) and half (48 percent) plan to pay for most or all of the cost. The nationally representative telephone survey conducted in March/April 2009 among 1,200 parents of children under age 18 was released today on “529 College Savings Day.”
In fact, 62 percent of parents of college-bound children are saving for education, trailing only retirement as a savings priority. Fourteen percent of parents reported saving the most for their children’s college, second to 27 percent who save the most for retirement. For nearly half (46 percent) of parents, saving for college ranks in their top three savings priorities.
The study also found that many parent responses demonstrate a lack of awareness about when to start saving, how much to save, and which college savings vehicles they should consider. To help families develop a save-for-college plan—based on their children’s age and the type of college they may be likely to attend—Sallie Mae today launched a new module to its free online tool, the Education Investment Planner. Available to anyone free of charge at www.SallieMae.com/save, the Planner projects the total cost of college factoring in the child’s age, type of institution, and the historical rate of increase in tuition. Then, the Planner helps parents build a plan to save their goal amount, and even lets them compare how increasing saving now could reduce borrowing in the future.
“It is clear that parents value the investment of a higher education for their children, and it is encouraging that so many are saving for that investment even in today’s tough economic times,” said Joe DePaulo, executive vice president, Sallie Mae. “Still, more families can benefit from the saving-for-college tools available, and we are committed to helping families develop a comprehensive, save, plan and pay strategy to make college not just a dream, but a reality.”
A higher number of Hispanic parents intend to pay for all of the cost of their children’s college (20 percent of Hispanic parents, compared to 15 percent of white parents and 6 percent of African-American parents). Hispanic parents also are the most likely to be confident in their ability to save their goal amount—54 percent indicated they are extremely or somewhat confident, compared to 44 percent of white parents and 31 percent of African-American parents.
Upromise Investments, the leading administrator of 529 college savings plans in America, offers several ways to take action on May 29, “529 College Savings Day.” For example, families may call a College Savings Hotline – 877-529-2980 – from 8 a.m. to 5 p.m. today to get answers to questions about saving for college and 529 plans.
In addition, families can earn extra money for college through Upromise’s free rewards program. Upromise members save money for college while making eligible everyday purchases of participating products and services from groceries to gas, shopping their favorite online stores, dining out or even taking a summer vacation. Upromise members have earned more than $475 million in member rewards since 2001.
Although the nation’s personal savings rate has risen to the highest it’s been in six years, only 5 percent of families have increased their college savings, compared to 18 percent who have increased their general savings and 12 percent who have increased retirement savings.
Nearly four out of 10 parents of college-bound children are not putting any money aside for college. Among the reasons they gave for not saving were that they don’t have enough money (62 percent), they are focusing on other savings priorities (49 percent), they expect their child to qualify for scholarships (35 percent), or they haven’t gotten around to starting a savings plan (34 percent).
The study also finds that parents use a variety of methods to save for college, but many are missing the tax-advantaged opportunities available for college savings such as 529 college savings plans, are not contributing automatically, and are not using a rewards program to earn additional savings for college. For example, only 33 percent save through a 529 plan, which enables education savings to grow free of federal income tax, and only 14 percent of parents report using a college savings rewards program that allows them to save money for college simply through smart spending.
For more information about how to save or to download a copy of “How America Saves for College,” visit www.SallieMae.com/529.
For more information contact:
Patricia Nash Christel (703) 984-5382 (Sallie Mae)
Eric Nielsen (202) 715-3030 (Gallup)
), commonly known as Sallie Mae, is the nation’s leading saving, planning and paying for education company. Sallie Mae’s saving programs, planning resources and financing options have helped more than 31 million people make the investment in higher education. Through its subsidiaries, the company manages $176 billion in education loans and serves 10 million student and parent customers. In addition, the company’s Upromise program has enabled 11 million members to earn more than $525 million in rewards to help pay for college. Its Upromise affiliates also manage more than $23 billion in 529 college-savings plans. Sallie Mae offers services to a range of institutional clients, including colleges and universities, student loan guarantors and state and federal agencies. More information is available at
. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.