Teens Continue to Play an Unexpected Role in College Savings Planning, Finds Private College 529 Plan's Second Annual Teen College Savings Barometer Study Large Majority of Teens Expect to Be Personally Responsible for Financing Some Portion of their College Costs
ST. LOUIS, May 19, 2014 /PRNewswire/ -- Private College 529 Plan(SM), a prepaid tuition plan sponsored by more than 270 leading private colleges and universities, today announced the findings from its second annual "Teen College Savings Barometer" study. Teens continue to play an active, if unexpected, role by helping parents both research how to pay for school and contributing to the family's college savings fund, according to the new study of 1,002 teenagers (13-17 years old) fielded by ORC. The vast majority of teens (93 percent in both 2013 and 2014) indicated that college savings planning was important to them. Eighty-three percent of teenagers in 2014 reported personally conducting research to learn about the best ways to pay for their college education, an increase over the 78 percent who reported conducting research in 2013.
The National Center for Education Statistics recently reported that high schools have reached the highest graduation rate in America's history; this cohort understands the significance of not only completing their high school education but also earning a college degree to ensure a bright professional future. However, paying for higher education continues to be a daunting and confusing task for teens and their families.
"The second annual Teen College Savings Barometer study sheds light on a number of topics that we believe families need to be discussing regularly with their kids. The new findings uncovered that a large majority of teenagers (91 percent) expect to be personally responsible for paying for a portion of their tuition costs once they begin college," said Nancy Farmer, president of Private College 529 Plan. "Teens in 2014 are more financially savvy than they were in generations past and the reality of paying for college is a responsibility that they are actively involved in with their parents."
On average, teens expect to pay for close to half (44 percent) of their education costs themselves. Among those who expect to be personally responsible for paying a percentage of their college costs, three in four (77 percent) plan to get a part-time job while in college, 65 percent plan to use money from grants and/or scholarships, 63 percent reported putting away money in advance to increase the amount of their personal savings accounts, and a quarter of the respondents (25 percent) choose living at home to save on housing costs.
Year-over-year data from the survey shows that three-fifths of teens (60 percent in 2013 and 61 percent in 2014) expect to have to take out student loans to pay for some portion of their future college education costs. Given these findings, it is good news that they are planning ahead by recognizing their role in the college savings equation to try and limit the amount of debt they will have once they graduate from college.
Efforts by parents have remained steady from last year's survey, with two-thirds of teenagers (66 percent in 2013 and 67 percent in 2014) saying that their parents discuss the need to save for the teens' college education with them. Despite these attempts, six in ten teenagers (62 percent) feel they need more general education about saving for college; and knowledge of 529 plans remained very low, with less than 15 percent of those surveyed (13 percent in 2014 and 14 percent in 2013) saying they could define the term "529 Plan."
The survey also uncovered that two-thirds of teens (66 percent) have ambitions to pursue an advanced degree beyond a standard four-year bachelor's diploma which clearly will increase their tuition costs and the need for advanced college savings planning efforts. Nearly half of all teenagers (46 percent) expect to take a portion of their future courses online to help lower the cost of their college tuition. The expectation of taking online courses to decrease their college tuition costs is more common among teens who reported making financial contributions towards their college savings fund (52 percent vs. 37 percent of those who have not personally contributed at all).
"Despite the rebounding stock market, most families worry they cannot save enough money to pay for the future cost of a college education," Farmer continued. "Diversifying savings with the addition of a pre-paid plan such as Private College 529 Plan allows parents and teens to hedge their bets against tuition inflation and increase their peace of mind."
A 2014 study conducted by Sallie Mae found that 89 percent of parents agree that college is an investment in their children's future, but only 41 percent claim to have started planning how they'll pay for it. This makes teens' personal efforts to save even more significant as their parents may not be as vigilant as teens believe them to be when it comes to building a nest egg in order to pay for their kids' future college education.
Overall, the survey respondents cited inaccurate estimates for the costs associated with college tuition. Of the teens surveyed, perceived annual tuition costs were underestimated by 12 percent for an out of state public four-year college or university, and by close to 20 percent for a private four-year college or university when compared to the average published charges reported by the College Board for 2013-2014.
Private College 529 Plan encourages families to visit TomorrowsTuitionToday.org, which helps increase awareness of the long-term financial planning that is required to help ensure that a higher education is financially attainable for as many American families as possible. There are many college tuition savings options and no plan is a one size fits all. This microsite provides information about different college savings options all in one easily accessible destination, allowing families to decide for themselves what mix of these investment and/or prepaid plans best fits their unique needs.
Private College 529 Plan offers teens and their families an alternative that takes the risk of rising tuition costs out of the college savings planning equation by offering a guaranteed way to save on the future cost of a higher education. Private College 529 account owners lock in today's tuition rates at any of the more than 270 participating schools and secure the option that they may be redeemed for up to 30 years. It's important to know, tuition rates change July 1st, time is running out to save for college at 2014 rates.
About Private College 529 Plan(SM)
Owned and operated by more than 270 leading private colleges and universities, Private College 529 Plan was created by authorization of the U.S. Congress for colleges and their consortia to help families save for college and increase the affordability and accessibility of higher education. Private College 529 Plan enables families to invest in their children's future by prepaying tuition at member institutions, protecting their savings from annual tuition inflation.
The educational mix of private institutions participating in Private College 529 Plan provides families with a wide range of college choices. As opposed to other state specific congressionally authorized plans, Private College 529 Plan has a national scope, with participating private colleges across the United States. It also differs in that its administrative management is by the institutions themselves as opposed to government.
Today, Private College 529 Plan is working for over 6,000 families with more than $310 million under management.
For more information, visit https://www.privatecollege529.com/.
The survey was conducted online among a sample of 1,002 teenagers 13-17 years of age living in the U.S., comprising 501 boys and 501 girls. The survey was administered from March 11-19, 2014 by ORC International using their Online CARAVAN®-Youth Omnibus Service. ORC is an unaffiliated third party which Private College 529 Plan commissioned and compensated to conduct this survey.
Participation in Private College 529 Plan does not influence or guarantee admission to any college or university. The information contained herein is subject to change without notice. This material is provided for general and educational purposes only, and is not intended to provide legal, tax or investment advice, or for use to avoid penalties that may be imposed under U.S. federal tax laws. Contact your attorney or other advisor regarding your specific legal, investment or tax situation.
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