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Families Make College a Top Savings Priority in 2014
Wednesday, February 5, 2014 7:00 AM

A new Fidelity study finds that for those parents who have resolved to save for college this year, many are committed to seeing their resolutions through and a have a plan in place to stay on track.

The Fidelity Investments 2014 College Resolutions Study recently surveyed American families that have started saving for higher education, examining their goals for 2014 related to college saving and planning. According to the study, 85 percent of parents report that saving for college is one of their top three savings priorities for 2014. One-third (34 percent) name it their top savings priority for the New Year.

Families are also setting solid goals this year. Eighty-eight percent say they plan to save at least as much as they did in 2013, with 60 percent intending to save even more. Many have a plan in place to achieve this objective: 58 percent report having a financial plan to help keep college savings on track. Most of these parents plan to save a fixed amount monthly, averaging $405 per month.

A first step in saving for college is to open a dedicated college savings account, like a tax-advantaged 529 plan, where earnings can be used free of federal income tax for qualified higher education expenses like tuition, room and board, and books. Fifty percent of respondents report they already have a 529 college savings plan. Among this group, 93 percent intend to contribute at least as much as they did in 2013, with more than half (53 percent) setting their savings goal even higher in 2014.

Among parents who have a financial plan in place for college savings, the number one strategy they identify is their intention to save monthly (81 percent). Other strategies include saving part or all of their 2013 tax refund (37 percent), ear-marking a portion of a bonus or raise (36 percent), and reallocating funds previously allotted to day care or after school care expenses (24 percent) or other savings goals (29 percent).

Many families are also planning to save a portion of monetary gifts their children may receive throughout the year for birthdays or other holidays (37 percent). Half of parents surveyed report that family and friends already contribute to their child’s college savings fund. Grandparents in particular are playing an important role, with 41 percent contributing.

Families are establishing important college planning goals as well. The study found that for many families, college resolutions go beyond savings to include a ‘to-do list’ related to better educating themselves and their children about the cost of college, and resources available to pay for college when the time comes. Among the tasks on parents’ college planning ‘to-do list’ for 2014:

  • Talk to their children about how much college costs and how their family will pay for it (58 percent)
  • Research scholarships and grants to help offset costs (53 percent)
  • Consider talking to a financial or planning expert for help (48 percent)
  • Learn more about how the financial aid process works (39 percent)
  • Ask their children to save some of their own earnings (30 percent)

Helpful links: Credit Union Student Choice, a business partner of Credit Union Resources, Inc. Credit Union Student Choice provides higher education financing services to America’s credit unions. Their comprehensive solution helps credit unions deliver fair-value private education loans and corresponding financial education to students and families. To learn more about Resources’ business partner, Credit Union Student Choice, please visit www.studentchoice.org.