Survey Says: Save more for college

Respondents to a new nationwide survey conducted by Money Management International think that parents should save more to help their children afford college. In fact, nearly half (47%) said that parents should be saving more. Echoing this thinking, nearly as many respondents (43%) think that parents should establish and fund a 529 plan. Rounding out the top three, many respondents (41%) think that students should be responsible for shouldering more of the financial burden.

The focus on saving seems to mirror the changes in national financial perceptions and habits. According to a New York Times article in June 2009: "The personal saving rate, which dipped below zero during the housing boom as Americans tapped home equity loans and other easy lines of credit, rose to 6.9 percent in May, the Commerce Department reported. That was its highest point since December 1993."

Other less popular ideas for funding an education included dipping into regular savings (19%), taking out a personal loan or use credit cards (17%), taking a second job (12%), taking a second mortgage or a home equity loan (8%), borrowing against retirement savings (6%), dipping into retirement savings (5%), and borrowing against insurance policies (4%). (Note: respondents could select more than one option.)

Several respondents made very specific suggestions which are worth noting:

  • "Encourage academic excellence early."
  • "Help when possible, but teach children about financial responsibility at an early age and encourage them to save, too."
  • "Instead of saving for college, use that college money to pay off their mortgage sooner. Then use what they would be paying for their mortgage and help their children with college."
  • "My children join military for schooling purposes. I have poor credit and no savings live paycheck to paycheck."
  • "Teach their kids they are NOT going to get everything handed to them, as I was taught; I paid for my college, and so did one of my kids that just graduated. All on their own."
  • "Teach them to be independent at an early age and help them do for themselves."
  • "Think government should pay for schooling cause without workers there will be no taxes and no one to pay them in the future."

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

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