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College Savings Report Card: Parents Give Themselves a B-Minus When it Comes to Saving For College


Fidelity® study finds number of families saving for college at all-time high, yet on track to meet just one-third of their college savings goals

BOSTON – Fidelity Investments® today announced the results of its 7th annual College Savings Indicator study, which finds that while families are still behind in their college savings goals, more are taking action to save and plan ahead. When asked to grade their college savings progress, parents gave themselves a B-minus.

College Savings Progress Report:

• Families Saving at All-Time High – Sixty-nine percent of families report they have started saving for college, an all-time-high since the inception of the study in 2007 (up from 66 percent in 2012, and 58 percent in 2007). College savings contributions also are up, with parents putting away an average of $5,000 last year.

• Parents Planning and Using Dedicated College Savings Accounts – Saving for college is a growing priority with 61 percent of parents reporting they have a financial plan in place and 37 percent utilizing a dedicated college savings account – such as a 529 plan – to help reach these goals.

• To “Ace” College Savings, Parents Still Have Work to Do – While there is an increase in positive saving behaviors, the study finds that on average parents plan to pay for 62 percent of the total cost of college, yet are on track to cover just one-third (34 percent) of that savings goal.

Fidelity’s business data supports the positive behaviors reported in this year’s study. The firm has seen a 22 percent increase in the number of new retail 529 college savings accounts opened during the first half of 2013, compared with the same period last year. Additionally, average retail account balances are up 8 percent from last year.

“While a B-minus is a passing grade, parents need to make sure they are considering the total cost of college. Families can make some simple adjustments to help improve their college savings ‘grades’ and keep themselves on track toward their goal,” said Keith Bernhardt, vice president of college planning at Fidelity Investments. “This year’s findings are consistent with what we hear from our customers – parents recognize the importance of defining their college priorities and setting a strategy to save regularly. If families commit to saving, planning and talking about college priorities early, they are better prepared to meet college costs and help their children avoid significant student debt in the future.”

The Rising Cost of College Prompts Families to Take Action
According to The College Board, the average annual cost of a four-year college in 2020 will be $46,368 1, a 38 percent increase compared to the current fees. Given such projections, it is no surprise that more than half (55 percent) of parents are concerned their children will have to make compromises in the quality of their education due to increasing costs. While the majority of parents do not want to burden their children with significant student loan debt, 43 percent do not believe they will be able to secure a student loan to cover the full amount needed to pay their children’s college bill. To address these concerns, many parents continue to take proactive measures, including:

• 54 percent expect their kids to take online courses for credit
• 54 percent intend to ask their child to work part-time during school to help pay expenses
• 50 percent will ask their kids to live at home and commute
• 40 percent will encourage their child to attend a public school
• 23 percent will encourage their child to graduate in fewer semesters

Financial Professionals Mediate Delicate Conversations, and Create College Financing Strategies
One-third (33 percent) of the parents in the study work with financial professionals, and tap them for a wide range of college-related insights, ranging from tax efficient savings to researching schools. Parents also have been tapping their advisors to help mediate and guide sometimes delicate college-planning conversations with their children. Of parents who work with financial professionals, one in ten (11 percent) had their advisors meet with their child to talk about college financial discussions, and an additional 45 percent of parents used materials provided by their financial professionals to help them facilitate college planning discussions with their children.

“Paying for college is a stressful topic, and adding a third-party financial professional may help take some of the emotion out of these highly-charged, yet important conversations,” said Matt Golden, vice president of college savings for Fidelity Financial Advisors Solutions. “For many parents, working with a financial planner helps give them the confidence that they can reach their college savings goals.”

Steps to Earning a Better Grade: Initiate College Savings Conversations and Create Plans
By taking steps early to prioritize college savings and planning, families can earn high marks in reaching their long-term college goals.

• Save early, save often: Opening a dedicated college savings account – such as a 529 plan – can help families save and stick to their goals. In fact, 88 percent of 529 plan owners have a financial plan in place to meet their college savings goals.

• Start conversations now: Parents who first started talking to their kids about the concept of paying for college before the age of 10 were more likely to have started saving (93 percent), compared to those who first discussed the topic when their child was 10 or older (80 percent).

• Identify teaching opportunities: When children are old enough to understand earning an allowance, discuss saving for college and the importance of establishing financial goals. Twenty-nine percent of parents report asking their children to put aside some of their own savings for college, with a typical starting age being between 12 and 13.

• Get more detailed as children age: As children approach college age, have detailed discussions about the total cost of college and the implications of college choices. Sixty-nine percent of families with older children (age 15+) who had these conversations took action to address how those issues would affect earning potential, job prospects and future student loan debt.

• Debunk misinformation about saving and future aid: Fifty-one percent of parents believe that saving too much will hurt their child’s eligibility for financial aid. In reality, today’s financial aid system focuses on income rather than savings in a dedicated college account. The more a family saves, the less they may need to borrow; therefore they will have more options when the time comes to send their child to college.

• Seek help from financial professionals: Consider working with a financial professional for added guidance. Ninety-two percent of families working with a financial professional feel confident they will reach their college goals.

Fidelity’s College Savings Resource Center Can Help Keep Families on Track with Saving
For families looking for assistance at any stage of their college saving process,Fidelity’s College Savings Resource Center provides a range of online planning tools and calculators, a broad overview of savings options and strategies, as well as resources to learn more about how to search and apply for financial aid and scholarships. Also available in the College Savings Resource Center is a series of Viewpoints articles focused on college savings strategies and decision making, providing expert points of view and actionable steps that families can take to stay focused on their college goals.

Examples include:

• The ABC’s of 529 college savings plans, outlining the range of investment options and potential tax advantages of 529 College Savings Plans

• How much college can you afford?, providing topics to explore as a family with budgeting for college

• Student loan guide, offering insights to help families better understand college funding options and the intricacies of student loans

Fidelity offers complimentary access to dedicated college planning representatives, as well as in-person guidance and college planning seminars at 182 investor centers nationwide.

Fidelity also provides financial advisor clients with 529 plan information, marketing support and online tools such as the 529 State Tax Deduction Calculator and the College Savings Planning tool. Financial advisors can get more information at or 1-800-544-9999.

1 College Board Trends in College Pricing, 2012-2013. Data is straight average of four-year public and private school costs. Fee for a four-year college in 2012-2013 is $33,621.

About the 2013 Fidelity College Savings Indicator
As part of the study, Fidelity conducted a survey of parents with college-bound children of all ages. Parents provided data on their current and projected household asset levels including college savings, use of an investment advisor and general expectations and attitudes toward financing their children’s college education. Using Fidelity’s proprietary asset-liability modeling engine, the company was able to calculate future college savings levels per household against anticipated college costs. The results provide insight into the financial challenges parents face in saving for college. Data for the Indicator (number of children in household, time to matriculation, school type, current savings and expected future contributions) were collected by Research Data Technology, an independent research firm, through an online survey of more than 2,500 parents nationwide with children aged 18 and younger who are expected to attend college. The survey respondents had household incomes of $30,000 a year or more, and were the financial decision makers in their household. College costs ere sourced from the College Board’s Trends in College Pricing 2012. Future assets per household were computed by Strategic Advisers, Inc. (a registered investment adviser and wholly owned subsidiary of FMR LLC). Within Fidelity’s asset-liability model, Monte Carlo simulations were used to estimate future assets at a 75 percent confidence level. The results of the Fidelity College Savings Indicator may not be representative of all parents and students meeting the same criteria as those surveyed for this study.

About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.3 trillion, including managed assets of $1.8 trillion, as of July 31, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit

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