Many millennials who’ve attended college know and understand the struggle of being left with a mountain of debt after college.
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Millennial parents are among the most ambitious when it comes to paying for their children’s college, intending to cover an average of 74 per cent of their children’s college costs. An earlier Pew study found that 86 percent of college graduates felt their own education was a good investment, even as the majority of Americans (57 percent) said the higher education system fails to provide good value for the cost. Now, 71-percent of millennial parents are actively saving money for their children’s college education.
Almost half of millennial parents plan to cover the entire bill.
However, millennials on average have only saved 28 percent toward their college funding goals.
Fidelity’s ninth annual College Savings Indicator Study showed that millennial parents were adopting smart college savings habits at a higher rate than older parents.
A study released today by Fidelity finds that 69 per cent of families are now saving for college, up from 64 per cent past year.
“It is critical that parents of all ages establish college savings goals that are practical for their family’s individual circumstances, and get the guidance they need to ensure they have an effective savings strategy to help them achieve those goals”, Keith Bernhardt, Fidelity’s vice president of retirement and college products, said in a statement.
The children of millennials may be better prepared financially for college than the kids of Generation X parents will, a new study suggests.
“Millennials have weathered challenging economic conditions for much of their adulthood”, Bernhardt said. One of the reasons why Millennials are planning to be generous, Fidelity says, is that 56% of them are still paying back student loans.
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What’s more, this focus on college savings may be a mistake for many. This implies greater debt levels and reduced financial wellness for parents and children, Fidelity warns. Financial aid formulas expect parents to use less than 6 percent of their non-retirement savings for college.
