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Sallie Mae Report Finds College Savings May Be Recovering

May 14, 2014

How America Saves for College 2014, a new study sponsored by Sallie Mae, sheds light on the changing landscape of college financial planning for families.

In 2014, 51 percent of families report having saved for college, up slightly from 50 percent of respondents last year. The figures are still lower than the previous high of 62 percent who reported savings in 2009.

The total amount saved on average has jumped to $15,346 up from $11,781 in 2013, a 30 percent increase. Most families who saved chose to utilize multiple savings vehicles in their college financial planning. Forty-five percent said they were saving money in a general savings account, while 29 percent were making use of tax-advantage 529 college savings plan accounts.

While 89 percent of parents acknowledged education spending as an investment in their children's future, a minority (41 percent) said they have started an organized plan for how they will pay for college.

As might be expected, savings activities varied greatly by parents' income levels. Only one-third of low-income families said they were saving for college, compared with 51 percent of middle-income families and 73 percent of high-income households. Financial hardship was cited as the main barrier to saving more.

The average amount saved for college by low-income families this year is $3,762, down significantly from last year's amount of $5,093.

Having a savings goal was also positively correlated with total amount saved. Families that have a specific college savings plan saved 83 percent more on average than families who save with no set plan. Parents with a plan expect to cover 40 percent of their children's college costs—far higher than the 23 percent expected through parents with no financial plan.

Overall, retirement seems to be a higher savings priority for parents. For families of all incomes, 53 percent of total savings are devoted to retirement accounts versus just 10 percent for college education.

The Sallie Mae study is based on a nationally representative survey of more than 2,000 parents of children under age 18.

Contact

Ken Redd
Director, Research and Policy Analysis
202.861.2527
E-mail