American parents say saving for college as important as saving for retirement, according to new research by Sallie Mae and Gallup

Percentage saving for college unchanged despite economy, many parents need education on how to save, avoid costly mistakes

Category:

Tuesday, October 5, 2010 8:08 am EDT

Dateline:

RESTON, Va.

Public Company Information:

NASDAQ:
SLM
"Sallie Mae is committed to educating parents of all income levels on how they can save responsibly for this important life investment and to providing the tools to get started."

American families with children who are likely to attend college rank saving for college as high a priority as saving for retirement, with one in five naming it their top saving priority, according to a new national study, conducted by Gallup and Sallie Mae, the nation’s leading saving, planning and paying for college company. Sixty percent of parents have saved for their child’s college education, about the same as last year despite the difficult economic environment, and are on track to save $48,367 on average by the time their child turns 18.

Nearly half of those not saving for college do not know how (18%) or are not sure which are the best college savings options (28%).

“The good news is that savers start early and plan to save enough to cover two years at a public university or one year at a private one,” said Albert L. Lord, vice chairman and CEO, Sallie Mae. “Sallie Mae is committed to educating parents of all income levels on how they can save responsibly for this important life investment and to providing the tools to get started.”

Twenty-four percent of saving-for-college parents risk their financial future by using retirement accounts to save for college and make other costly mistakes by not investing in tax-advantaged options, such as 529 college savings plans. Across all parents saving for college, the average amount saved for college in retirement accounts is $6,503, compared to $3,340 in 529 college savings plans. Although each state offers 529 college savings plans with low fees and tax incentives benefitting all income levels, half of those not currently using one say that they are not at all familiar with 529 plans.

Most savers (60%) use at least two savings vehicles, and the number of options utilized increases with income. General savings accounts and CDs are the most popular (50%) followed by investment accounts (34%). Eight percent save through a college savings rewards program.

Sallie Mae provides a full spectrum of savings solutions, including High-Yield Savings accounts, Certificates of Deposits, 529 college savings plans and Upromise rewards. The company’s Upromise Investments is the largest administrator of college savings plans managing more than $26 billion in 529 assets across 23 plans in 12 states. High-Yield Savings accounts and Certificates of Deposit by Sallie Mae are FDIC insured and have savings interest rates among the highest in the nation. The Upromise rewards program is free to join and through it members have received $575 million for college from everyday spending.

The second annual “How America Saves for College” report, conducted March-May 2010 by Sallie Mae and Gallup, is a nationally representative survey of 2,092 parents with children under the age of 18. The full report is available at www.SallieMae.com/howAmericaSaves

Sallie Mae (NASDAQ: SLM) is the nation’s No. 1 financial services company specializing in education. Celebrating 40 years of making a difference, Sallie Mae continues to turn education dreams into reality for American families, today serving 25 million customers. With products and services that include 529 college savings plans, Upromise rewards, scholarship search and planning tools, education loans, insurance, and online banking, Sallie Mae offers solutions that help families save, plan, and pay for college. Sallie Mae also provides financial services to hundreds of college campuses as well as to federal and state governments. Learn more at SallieMae.com. Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

Gallup has studied human nature and behavior for more than 70 years. Gallup’s reputation for delivering relevant, timely, and visionary research on what people around the world think and feel is the cornerstone of the organization. Gallup employs many of the world's leading scientists in management, economics, psychology, and sociology, and our consultants assist leaders in identifying and monitoring behavioral economic indicators worldwide. Gallup consultants also help organizations boost organic growth by increasing customer engagement and maximizing employee productivity through measurement tools, coursework, and strategic advisory services. Gallup's 2,000 professionals deliver services at client organizations, through the Web, at Gallup University's campuses, and in 40 offices around the world. For more information go to www.gallup.com.

 

Contact:

Deborah Hohler (617) 454-6741
Eric Nielsen (202) 715-3030 (Gallup)