Fidelity College Savings Indicator Finds Parents Are Projected to Meet Only 21 Percent of Future College Costs - Three Point Decrease from One Year Ago

Business Wire, Oct 1, 2008

Parents Employing Savings and Funding Strategies to Meet Expenses

Even though today's parents are facing financial challenges, 60 percent have already started saving for future college expenses, recognizing the vital importance of providing their children with a college education. In fact, Fidelity's survey shows that half of parents have begun saving earlier, starting to put aside money towards college savings when their child was three years old versus four years old as seen in last year's findings. Thirty percent of parents are investing in a dedicated college savings account, like a 529 plan, and more than half (58 percent) of these parents are investing more strategically, opting for regularly scheduled contributions, instead of lump sum deposits coming from earned money or a gift.

"College graduates have the potential to earn more income and have more options available for employment, which is why it's critical for parents to remain committed to college savings today, so that their children may have a competitive advantage later in life," said Ciccariello.

In addition to saving earlier and more strategically, nearly three-quarters (72 percent) of parents are also seeking alternative strategies to meet rising college expenses. When asked specifically how they expect to bridge costs, 55 percent of parents will have their child work part-time while in school, 44 percent plan to have their child live at home and commute to college, 37 percent will encourage their child to attend a public school, and 23 percent of parents may ask their child to graduate in fewer semesters. These numbers all represent increases compared to last year's survey results.

Despite Savings Efforts, More Guidance and Education Needed

Three-quarters of parents (74 percent) did not seek any financial guidance or education about the savings options available to help meet future higher education expenses. The research also revealed the need for additional education and guidance on loans and other funding sources. For example, despite their reliance on student loans, 42 percent of parents surveyed said they are not knowledgeable when it comes to researching and applying for these loans.

A financial advisor can be a valuable asset in helping parents understand the many college savings options available to them and in establishing a sound investing strategy. In fact, 36 percent of parents said that their advisor proactively suggested opening and investing in a 529 plan account, up from 30 percent last year. Additionally, this year's College Savings Indicator found that those families working with financial advisors are on track to cover 31 percent of future college costs.

"Our research shows that 47 percent of those parents who work with a financial advisor have invested in a tax-advantaged dedicated college savings account," said Jeff Troutman, vice president of college planning, Fidelity Investments Institutional Services. "This reflects a tremendous opportunity and need for advisors to be proactive about incorporating college planning into their overall financial planning discussions with their clients."