Fast Facts: American Families and Their College Savings Efforts
AllianceBernstein’s College Savings Crunch research demonstrates that, despite their best intentions, parents today are unprepared to cover the real cost of a college education. What ’s more, parents have unrealistic expectations regarding the availability of financial aid, scholarships and grants.
Not surprisingly, parents feel an enormous sense of responsibility when it comes to paying for college. In fact, aside from their own retirement, saving for college is one of parents most important financial goals.
Parents Feel Responsible for Paying for College
Clearly parents are focused on contributing to the future success and happiness of their children. Yet, when it comes to college savings, parents set the savings bar too low. Parents revealed in our survey that college savings is not as high a priority as it should be. Nearly three-fourths of surveyed parents said that they could save more for college if they limited their discretionary spending.
Compulsive Consumerism Derails College Savings
Parents who spent more on the following in the past year than they saved for their child’s college education:
AllianceBernstein’s research further revealed that parents are relying heavily on financial aid, scholarships and grant money to help cover college expenses. In fact, 87% of parents surveyed are counting on scholarships and/or grants to cover a portion of their child’s education.
Parents in Search of Scholarships
Our survey of 200 financial aid administrators indicates that many parents may be in for a rude awakening when it comes to financial aid and scholarships.
Financial Aid Administrators Paint a Different Picture
- 97% of financial aid administrators think parents have a false sense of security that colleges will help them cover costs
- 92% say parents overestimate the amount of scholarship and grant money their children will receive
- 66% believe that scholarships and grants are less available than they were in the past
- 73% say that less than half of those who apply for aid are financially able to meet their expected financial contribution
A failure to plan for college expenses can hurt parents down the road. The result could be a cycle of debt that spans generations. In fact, 62% of parents said that paying for college will significantly affect their retirement fund.
Parents Debt and Sacrifices
College financing is a fundamental life planning issue. In order to rise to the occasion, parents must be diligent, dedicated, and ready to take advantage of all the resources available to them.
According to AllianceBernstein’s College Savings Crunch research, 70% of surveyed families do not have a financial plan that takes into account all of their financial goals.
Parents Need Some Good Advice
Many parents could benefit from the help of a financial professional to plan and save effectively for their children’s education.
Parents who say they:
About The Surveys
The survey of 1,358 parents was conducted via the Internet between August 2 and August 20, 2006 by the national polling firm of Mathew Greenwald & Associates, Inc. Parents participating in the poll had at least one child under the age of 18 who they identified as likely to attend college and household incomes of $50,000 or more.
The survey of financial aid administrators was conducted over the Internet by Mathew Greenwald & Associates between August 2 and September 6, 2006. Two hundred student financial aid administrators at four-year undergraduate public or private colleges with at least three years of experience were surveyed. All respondents were either responsible or oversaw individuals responsible for awarding financial aid.1