Parents plan to cover 64% of their children’s college costs, Fidelity’s eighth annual College Savings Indicator Study found. Unfortunately, the report also found parents are on track to meet just 28% of their college savings goal.
Furthermore, most parents agreed that their children should shoulder some of the cost of their own education, but many haven’t spoken with them about those expectations. Just 57% of parents with children 13 or older have talked to them about how to pay for school.
“Parents are taking a team approach to college funding, which is perhaps a more practical way to look at it, since it can be valuable for kids to have some ‘skin in the game’ when it comes to their education,” Keith Bernhardt, vice president of college planning at Fidelity, said in a statement.
A third of parents are adding an advisor to their team, up from 21% when Fidelity first started surveying investors about college savings. Of those, the majority are looking for advice on how to pay for college, but 36% are also looking to their advisor to help determine how much of their children’s college costs they should pay for.
“These findings indicate that even though families that use advisors may have the means to pay for a larger share of their children’s college education, they still want their child to value that education by understanding and contributing to the cost,” Matt Golden, vice president of college savings for Fidelity Financial Advisors Solutions, said in a statement.
Fidelity broke out the benefits advisors provide their clients regarding college savings. Less than half of parents without an advisor have a plan for reaching their college savings goal, compared with 82% of parents with an advisor. Less than a quarter of advisor-less parents are using dedicated education savings products like 529 plans, compared with 57% of those with an advisor.
Eleven percent of parents who work with a financial professional have actually had their advisor meet with their children to talk about college costs. Forty-three percent used advisor-provided resources to facilitate a conversation about costs.
A study by Allianz found many parents, especially single parents, are choosing to save for college over retirement, but Fidelity found saving for college was respondents’ No. 2 priority this year. Although 70% or respondents said they were saving monthly, with a median contribution of $250, many are still off track, according to Fidelity.