Most Families: Less than $10,000 Saved for a College Education

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Even a 529 Plan, an account that allegedly helps parents save for the cost of a college education, may not be enough.

Frankly, it likely won’t be.

Figuring out how to cover the cost can be, and often is, a daunting task. So daunting that many find it absolutely overwhelming.

Most families have saved $10,000 or less, an amount barely satisfying one year’s tuition and fees, let alone a family’s portion of the annual cost-of-attendance (e.g., tuition, fees, room, board, books, transportation, personal expenses, etc.).

A Student Loan Hero survey of 1,035 families saving for college, conducted January 23-24, 2018, found that:

57% have saved $0-10,000
22% have saved $10,001-20,000
9% have saved $20,001-30,000
5% have saved $30,001-40,000
3% have saved $40,001-50,000
4% have saved $50,001 or more

According to Andrew Pentis of Student Loan Hero, “The price tag of tuition is rising… That makes it all the more important for parents to choose the right vehicle to grow their college savings. If they wait for the teenager to navigate the college financial aid process, they’re late to the game.” In fact, if their child has entered junior or senior year of high school, they are well past “Crisis Planning Mode.”

While a 529 Plan may be the right vehicle for a specific family, a 529 Plan is not a savings vehicle. Rather, it is an investment vehicle, tied to market fluctuations, meaning a family could end up with much less than expected or needed when the bill comes due. Moreover, the balance of the 529 Plan negatively impacts financial aid eligibility.

Contact us for more information regarding the proper savings vehicle, a vehicle that protects the amount contributed and the earnings thereon with no impact on financial aid eligibility.

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