"How America Saves for College 2016,” the sixth in the series of national studies by Sallie Mae and Ipsos, reveals more parents are saving for college and they’re saving more money.
Specifically, 57 percent of parents are saving for college, up from 48 percent in 2015, and the average amount they have saved is $16,380, up from $10,040 last year, both four-year highs. Parents are also more confident about saving for college. More than half (55 percent) of parents feel confident they will be able to meet the cost of college, up from 42 percent in 2015.
“How America Saves for College 2016” also finds that:
- Millennial parents are committed to saving for college. Millennials — age 35 or younger — feel more confident (64 percent) than other generations about meeting the cost of college. More of them are saving (65 percent, vs. 50 percent of Gen X parents) and Millennials have saved more money ($20,155, on average, vs. $12,428 for Gen Xers.).
- The use of 529 college savings plans is increasing. Use of 529 college savings plans rose to 37 percent, up from 27 percent the prior year. That said, six in 10 parents (61 percent) are still using general savings accounts and nearly four in 10 (38 percent) are using checking accounts to save for college. More than half of the parents saving for college but not using 529 plans say they are not aware of these tax-advantaged plans.
- More parents are creating a plan to pay for college. The proportion of parents with a plan to pay for college rose to 51 percent in 2016, up from 42 percent in 2015, and the highest in the history of the study. Parents with a plan save significantly more for college: $18,389, on average, compared to the $10,468 reported by parents who don’t have plans.
“How America Saves for College 2016” reports the results of online interviews Ipsos conducted in May and June 2016 of nearly 2,000 American parents with at least one child younger than age 18. The survey sample reflected a cross-section of key demographic variables in the United States, and respondents were able to take the survey in English or Spanish.