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.