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News Release

American Parents Struggle to Save For Higher Education, Manage Living Expenses

September 16, 2014

CFP Board survey finds economic conditions prevent many parents from saving for their children’s higher education

Costly living expenses prevent many parents from saving for their children’s higher education, according to a survey released today by Certified Financial Planner Board of Standards, Inc. (CFP Board). The findings also show that a third of American parents are still repaying their own student loan debt, impeding their ability to save for their children.

In the survey, conducted on behalf of CFP Board by ORC International, more than two-thirds (69 percent) of the 1,003 parents surveyed report they have not started saving for their children’s higher education because everyday living expenses have left no additional funds. Nearly half of American parents (48 percent) say that student debt has prevented them from saving for other priorities such as an emergency fund (33 percent), retirement (32 percent) or their children’s higher education (31 percent). Additionally, saving for their children’s higher education is not most parents’ top priority; the most important financial goal for parents is building an emergency fund (40 percent) followed by saving for retirement (33 percent).

“As we continue to debate the value and cost of higher education, we must acknowledge the difficult balancing act many parents face when repaying their own debt and saving for their children,” says Eleanor Blayney, CFP®, Consumer Advocate for CFP Board.  “Managing expenses from the past and present is crowding out planning and saving for the future, including children’s higher education, retirement, and even essential emergency funds.”

Of those who have saved for their children’s higher education, most (53 percent) have put away less than $10,000 for their oldest child (typically the one going to college first). With each additional child, parents are more likely to have not started saving. Yet the College Board reports that the average undergraduate tuition, fees, room and board for the 2013-2014 academic year was $18,391 for public, four-year institutions for in-state students and $31,701 for out-of-state students, and $40,917 for private, nonprofit colleges and universities. 

While 83 percent of parents are currently saving or plan to save for their children’s education, the challenges are many according to CFP Board’s survey:

  • Half of American parents borrowed to pay for their own higher education (47 percent). Of those parents, 42 percent still have debt to pay off, with 15 percent having more than $25,000 still to repay. 
  • Nearly one-fifth of parents (17 percent) are not currently saving and have no plans to save for their children’s higher education.
  • While a majority of parents (56 percent) hope to qualify for or are “counting on” financial aid to send their children to college, nearly one in four do not know or have not started to think about financial aid for their children.
  • Most also expect additional financial support for their children’s education, with nearly half (45 percent) anticipating it will come in the form of merit aid. More than one in 10 (13 percent) expect athletic scholarships will help to fund their children’s higher education.
  • While so many parents borrowed to finance their own education, only 17 percent expect to send their children to postsecondary schooling through a combination of savings and loans.
  • Of those parents currently saving for their children’s education, the majority (61 percent) are relying upon a savings account to save, 40 percent are using a 529 plan, and 33 percent are using investments.(Note: Respondents could select more than one vehicle for saving.)
    • Older parents (ages 40+) are more likely to use 529 plans and investments.
    • More than half of parents in the Northeast (54 percent) use a 529 plan, significantly more than parents in the Midwest, West, and South.

“With tuition rates rising year after year, financing a child’s higher education may very well be a more expensive investment than buying a home, and a lot harder to finance,” says Blayney. “Finding the funding for college may require careful planning and several sources, especially when parents are paying down their own remaining student debt and dealing with other financial priorities.”

Blayney added, “Many parents may not be effectively investing for college, losing out on tax benefits and higher returns from 529 plans and investments. Some parents appear to have unrealistic expectations about their ability to balance funding a child’s college experience with their own financial goals, and should seek professional guidance. Contacting a CERTIFIED FINANCIAL PLANNER™ professional can be a helpful first step to manage competing financial priorities, set achievable goals, and ensure adequate savings for parents’ futures and their children’s.”

Consumers can learn more about saving for college, and finding and working with a CERTIFIED FINANCIAL PLANNER™ professional at