As many parents dip into retirement savings to pay for their children’s college educations, the parents who work with a financial advisor are saving more for college costs, Fidelity Investments reported in a study released Tuesday, August 24.

In its fourth annual college savings indicator study, the Boston-based investment giant highlighted how the challenging economic environment has reduced the percentage of college costs parents are projected to meet to 16%. That compares to 18% in 2009 and 24% in 2007, the first year of the study.

But the savings indicator also shows that that families working with an advisor are on track to cover 28% of projected college costs. And 88% of parents who are already working with an advisor have started saving for college versus 67% of parents who are not working with an advisor.

“It really shows that working with an advisor can add value not only in terms of a savings discipline but in long-term results,” said Jeff Troutman, Fidelity’s vice president of college savings, in a phone interview.

Another national college study, released August 10 by Sallie Mae and Gallup, shows parents and students borrowing more to pay for the escalating total cost of college, which survey respondents reported increased by 17% compared to last year.

Conducted from March through May 2010, the Sallie Mae study shows that parents paid nearly half, or 47%, of the share of college costs for the 2009-2010 academic year, and students paid roughly one-quarter through income, savings, and loans. Parents’ income and savings pay for 37% of the average cost for college while parent borrowing paid for another 10%. The remainder is paid for through a combination of grants, scholarships, friends and family, and student income, borrowing, and savings.

Contributions from parents rose the most, driven by an increase in the use of 529 college-savings plans, the Sallie Mae study said.

Similarly, the Fidelity study reported that more parents are now saving for college in a dedicated account. Two-thirds, or 67%, of parents have begun saving for future college costs, compared with 63% in 2009 and 58% in 2007. “And more families are becoming more aware of tax-advantaged ways to save, with 51% of families reporting they are familiar with tax-advantaged 529 college savings plans this year compared with 40% in 2009,” according to Fidelity, which also released college savings guidelines on Tuesday.

Fidelity’s income-based savings guidelines show that a family making $75,000 a year and expecting to send their child to a four-year university would need to save in a 529 plan 3% of their salary each year (roughly $2,250 a year or $190 a month) over an 18-year period to have saved sufficient funds.

“There are a number of things advisors can do to work with parents. First and foremost, they can get them on a program of disciplined savings. Using a 529 plan is one of the best tools available,” Troutman said. “For example, if a family receives a bonus or a child gets some birthday or holiday money, if a 529 plan is already established, there’s a place to put that money right away. It’s an easy savings vehicle, and there are tax advantages. The money goes in after taxes, but the account grows tax deferred, and any earnings that come out to pay for qualified higher education expenses are not taxed at both the state and federal level.”

Also according to the Fidelity study, nearly six in 10 parents with high school-aged children said their advisor discussed strategies for paying for college, including new funding sources, postponing plan distributions, and spreading out withdrawals. Almost twice the number of advisors from last year are now helping clients with researching schools (25%, up from 13%), navigating the grant process (30%, up from 16%) and securing financial aid (37%, up from 20%).

Read our August magazine story on college savings from the archives of InvestmentAdvisor.com.