As the economy rebounds, family savings are inching up— 7percent from last year—but the amount they are earmarking for college is still small.
A new report by Sallie Mae, the largest financial services company specializing in education, finds Americans, on average, have tucked away $115,604 in savings, but have set aside just 10 percent of that for their kids’ college expenses.
The information released Thursday focuses on the savings patterns of families with children under the age of 18. Sallie Mae found that 51 percent of families surveyed have set up college-savings funds. And, it is the second-highest savings priority for families next to retirement.
Among families who are saving for college, the average accumulation is $15,346, up 30 percent from last year because the value of investments improved for middle- and upper-class families. Low-income households weren’t as fortunate. Sallie Mae discovered the value of their college savings dipped.
Families with teenagers were better positioned for their transition to higher education with savings topping $21,000 on average, compared to those with children under the age of seven who typically had about $10,000 designated for future tuition expenses.
Research shows that early college-savings accountscan increase students’ chances of going to and completing college.
In choosing a college, cost is increasingly a factor and nearly two-thirds of students take out some form of a loan to finance their degree, with the average leaving school after a four-year degree with $29,400 in debt.
A version of this news article first appeared in the College Bound blog.