Putting money aside for any type of financial goal — whether it’s a new car, house or even that pair of shoes you’ve been dreaming of — is a great accomplishment. Sometimes all you need is a few months to save, while other times it can take decades. Such is the case with paying for college, something many parents start saving for when their first child is born. But how many are really thinking this far ahead?
Quite a few, apparently. At least that’s what a new survey from Sallie Mae, a private student loan servicer, discovered. In fact, the report shows that the number of parents saving for their child’s college education is at a four-year high — 57% of parents report they’re doing so this year, compared to the 48% last year.
And it’s not just the volume of parents who are doing this that has increased. The survey reports that they’re saving more now too, with an average of $16,380, up more than $6,000 from last year. Millennial parents are leading the charge on how much they’re saving for their child’s college education, with $20,155, followed by $18,323 saved by the Baby Boomer generation.
Sallie Mae paired with Ipsos, a market research company, to conduct this survey. Ipsos ran an online survey from May 26 to June 6, 2016, which gathered interviews with 1,959 adult parents with children younger than 18. The survey was conducted in both English and Spanish and reflected a “cross-section of key demographic variables in the United States,” according to the report.
The results were weighted by gender, age, race, religion, education and household income crossed by race, with all demographic profiles coming from the November 2012 U.S. Census Bureau’s Current Population Survey (CPS). The survey has a margin of error of approximately plus or minus 2.2 percentage points, with a confidence level of 95%.
Saving for College
If you’re a parent who is putting aside money for your child’s education, it’s a good idea to start as early as possible to give yourself time to save as much as you can before the college acceptance letters start pouring in. This is even more true for parents who have more than one child, as they’ll want more funds. But it’s also important for parents to talk with their kids about their financial situation and think about all options when it comes to paying for college, including scholarships and student loans.
It’s also essential to consider the effect student loans have on your credit. Having these loans can certainly help diversify your credit profile, but that will only be so beneficial. If you default on one, your scores can be extremely damaged. And this can impact your future in all sorts of ways, like when it comes time to take out a mortgage or car loan. Some employers even look at a version of your credit report as part of the application process. To keep an eye on how your financial habits are affecting your credit, you can view your free credit report summary, updated every 14 days, on Credit.com.