5 ways to up the grade on college saving
August 28, 2013 4:46 PM
In its annual College Savings Indicator study, Fidelity Investments reports that 69% of families have started saving for college, an all-time high since Fidelity began the survey seven years ago. But parents aiming to save could use all the help they can get. Here is Fidelitys advice for employees who want to meet higher education expenses goals and how employers can help them.
1. Save early, save often
One of the best savings tools available to parents may be opening a dedicated college savings account, such as a 529 plan. Eighty-eight percent of 529 plan owners have a strategy in place to meet their college savings needs. This years 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, says Keith Bernhardt, vice president of college planning at Fidelity Investments.
2. Start talking with those future students now
Parents who first started talking to their children about the concept of paying for college before the age of 10 were more likely than those who didnt to have started savings. 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, Bernhardt says. Some 29% of parents report asking their children to put aside some of their own savings for school, typically starting at age 12 or 13.
3. Get more detailed with children as they age
As kids get older, have in-depth discussions about the total cost of college and the implications of college choices, including earning potential, job prospects and future student loan debt. It may be time for some tough decisions: 55% of those surveyed by Fidelity are concerned their children will have to make compromises in the quality of their education. While a good savings plan is the best defense, on offense many plan to have children take online courses for credit (54%), to ask their children to work part-time to help pay for expense (54%), request their children live at home and commute (50%), push for a public-school choice (40%) or other measures.
4. Debunk misinformation
Fifty-one percent of parents surveyed by Fidelity think that saving too much will hurt their eligibility for financial aid. Not so. Colleges financial aid systems focus on income rather than savings in a dedicated college account. The more you save, the less you may need to borrow. Check all your facts on financial aid before you begin your plan.
5. Seek help from financial professionals
Ninety-two percent of families working with a financial professional feel confident they will reach their college goals, and they can help in multiple ways. 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, says 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. Of parents who work with advisers, 11% had their financial professional meet with their child to discuss college costs, and 45% used material provided by their professional to lead similar discussions themselves.
