Fidelity Investments’ and the state of Delaware’s 7th Annual College Savings Indicator study present the key findings from a study designed to measure college savings behaviors, attitudes and expectations among families with children they intend to send to college.
Research Data Technology, an independent research firm, conducted the online study on behalf of Fidelity Investments from June 5 to 24 among a national sample of 2,538 families with children 18 years old and younger. All families had annual household income of at least $30,000.
Findings from Delaware respondents
Families plan to pay 68 percent of their children’s total college costs. However, they are on track to cover just 17 percent of that savings goal. They will rely on other sources such as grants, scholarships, student loans, gifts from grandparents and other sources to make up the difference.
In Delaware, 65 percent of families have started saving for college, and on average, put aside $2,400 last year. Fifty-seven percent of families say they have a financial plan in place to help them reach college savings goals.
Thirty-three percent of families report they are investing in a 529 college savings account, an increase from 19 percent in 2012.
Rising cost of college a concern
Many Delaware parents are voicing concerns as the cost of college continues to rise; 78 percent of families believe college is becoming cost prohibitive; 56 percent are concerned their children will have to make compromises in the quality of their education due to cost; 46 percent do not believe they will be able to secure a student loan for the full amount they need to pay for their child’s education. Parents continue to consider multiple strategies to manage these rising costs, as most consider college a minimum requirement for getting a decent job and a similar percentage do not want to burden their children with hefty student loans when they graduate.
Strategies to manage costs
Strategies Delaware parents are considering to help manage college costs include the following: 55 percent expect their kids to take online courses for credit, 58 percent will consider having their child live at home and commute, 38 percent will encourage their child to attend a public school and 31 percent will encourage their child to graduate in fewer semesters. Parents are also asking their children to get involved and be accountable for their education.
Sixty-eight percent of parents agree that children won’t appreciate college as much unless they share some responsibility for paying for it. In addition, once their children get to college, 61 percent of Delaware parents will ask their children to make the grade and require they maintain a certain grade point average in order to fund their college. The average GPA parents say they will require of their children is 3.1.
The College Savings Indicator was calculated by Strategic Advisers Inc. in collaboration with Fidelity Investments Research and Analysis.
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.
For information about college savings plans for Delaware residents, visit www.fidelity.com/529-plans/delaware.