Survey: Fewer Families Can Afford to Save for College

Considering the economy and the ridiculous price of college today, I am not surprised by this story. The Washington Post ran an article on how less families are saving for college because they can't afford it.

The study, which was conducted by Gallup, found that the percentage of families who planned to make little or no contribution to tuition increased, while the percentage who expected to cover more than half of expenses decreased. The trends were particularly pronounced in Hispanic families, where the number who thought they could only pay a little jumped from 12 percent to 35 percent.

In addition, the percentage of families who said the reason they are not socking away money for college is that they cannot afford it rose from 62 percent last year to 68 percent this year....

Still, the study found that even though families are financially stressed, saving for college remained a priority. About one-fifth of families reported it as a top financial goal - up from 14 percent last year and on par with those who rank saving for retirement as the priority.

More evidence of how we penalize workers in this country:

On average, families have saved about $28,000 to pay for college. About 12 percent of that money is in 529 plans, while 14 percent comes from general savings accounts or certificates of deposit. Another 21 percent comes from investments, but the largest portion of that money - 23 percent - is in retirement savings.

Sallie Mae senior vice president Sarah Ducich said the finding that families are relying heavily on retirement accounts "is a little bit disturbing."

Financial experts say that raiding retirement accounts to pay for children's college can be risky. There are tax penalties and other fees if money is withdrawn from the accounts early, and loans against a retirement plan come with restrictions on how quickly they must be paid off and the amount that can be borrowed.

Have you socked away for college? Admittedly, we do not have a separate college savings account for our children. Instead, we have opted to sock away money in savings and pay down our mortgage. And believe me, we feel incredibly fortunate to do be able to do this as we know many folks living paycheck to paycheck.


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