According to a study released Tuesday by Fidelity Investments, parents are ill-prepared to meet tuition costs, with their savings likely to cover only 16% of the bill. The data show that there have been a number of significant alterations in the way parents put away money for their children’s education.
The fifth annual College Savings Indicator, found that while overall preparedness to meet college tuition bills has shrunk since the study began—now at 16% for the second year in a row, down from 24% in the initial year of the study—a greater percentage of parents is putting aside money for college: 67% today, compared with 58% in 2007. Parents are saving earlier, too, with 40% putting away funds in a dedicated account when their children are between newborn and 5 years old, compared with only 27% in 2007.
Another way parents are coping is by asking their children to share the expense of college in a variety of ways—everything from completing a degree in fewer semesters to getting a part-time job to choosing a public college or university—and by getting a second job or sending a nonworking spouse back into the workplace.