Fewer parents planning to use retirement funds to pay for kids’ college, report says

CLEVELAND, Ohio — Fewer parents are planning to use retirement funds to pay for their child’s college education, according to Sallie Mae’s annual college savings report. 

The number of parents responding that they are planning to use retirement funds for college expenses halved from 2016 to 2018 from 20 percent to 10 percent. The amount of people who said they wouldn’t use retirement money to pay for schooling went up to 69 percent from 60 percent.

Sallie Mae, a financial service company, teams up with Ipsos, a market research company for “How America Saves for College.” The report, published since 2019, looks at attitudes toward college affordability and saving for college.

This year, Ipsos conducted online interviews with 2,003 parents who have children under 18. 

Along with being less likely to use retirement funds, more parents think that their child should have some responsibility when it comes to paying for college. That percentage went up to 59 percent from 51 percent. 

Read the full report in the document viewer below.

Here are some more key takeaways: 

  • Though the percentage of parents who think parents and children should share responsibility for paying for college has gone up, the amount of people who say only the student should be responsible stayed around 8 percent. 
  • The average college savings goal is $55,342, 11 percent lower than in 2016.
  • The average amount of money parents have saved for college has increased from $16,380 in 2016 to $18,135. That’s the highest amount in the last five years of the report.
  • Education level makes a significant difference in how much of a plan that parents have for college savingsOf respondents where one member of the family has a four-year degree, 73 percent are saving, with 53 percent for associate degrees and 46 percent for no degree.  
  • Overall, nine out of 10 parents still say that college is an investment in their children.
  • About six out of 10 parents are saving for college, with a third more saving this year.
  • Nine out of 10 parents responded that they think they can meet their savings goals. 
  • On average, parents start saving for their child’s education at age 7.
  • Parents are closer to their savings goals in this years survey. Last year, parents were about a quarter of the way to their goals. This year they’re a third. 
  • This was the first year that the majority of respondents had used 529 plans to save for college as opposed to savings accounts and investments accounts. 529 plans are tax-advantaged and specialized for college savings. About 30 percent of respondents invested in 529 plans, 22 percent in savings plans and 14 percent in investment accounts.  

Source