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4 Reasons Parents Aren’t Saving For College—And Why They Should

At a recent backyard cookout with friends, the talk turned to college—and the ever-climbing cost of attendance. 

“How does anyone ever save enough for their kid to go to college?” my friend asked in dismay. “I don’t even know if we should bother to try saving for college. Hopefully we’ll just get really good financial aid.” 

I understood where she was coming from. But over the years, I’ve been lucky enough to interview dozens of experts on paying for college, and they all say the same thing: Some savings are better than no savings, and it’s never too late to start saving for college. 

When I related this story to Tim Gorrell, executive director of the Ohio Tuition Trust Authority, which manages Ohio’s 529 Plan, CollegeAdvantage, he nodded knowingly. So did Judy Cunningham, who manages community outreach for their organization. In their many combined years of experience in helping families save for college, they’ve come across four main reasons parents are reluctant to save for college. And they have thoughts about each of them. 

Why Parents Should Save for College

Objection #1: I don’t even know if my child will go to college.

FACT:  Says Gorrell, “You don’t have to know now what their path will be, but it’s reasonable to assume that they will need to do something after high school that will incur some type of expense, even if it’s not a four-year college.” Many parents don’t realize that the money in a 529 plan can be used for a variety of educational opportunities that exist after high school, including trade schools, apprenticeship programs, even gap year studies—as long as they are offered through a federally accredited education institution. 

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“There is also an added benefit to saving up for your child, which is that it creates expectation,” adds Cunningham. “When they know you’ve been saving up for their education, they are more likely to want to take advantage of it.”

Objection #2: If we have too much in savings, it will hurt our financial aid award.

FACT:  Gorrell hears this one often but hastens to let parents know that the FAFSA (Free Application for Federal Student Aid) only counts the savings in a 529 plan at 5.64%. So, for example, 529 savings in the amount of $10,000 would only reduce a student’s aid award by $564. “The benefit of saving for their education far outweighs that,” says Gorrell. 

Objection #3: What if my child ends up getting a scholarship and I don’t need the funds I saved?

FACT:  Often, parents are worried that they’ll lose out on the savings they put into a 529 plan because it can only be used for education. But, says Cunningham, “There’s so much flexibility with how you can use those funds. They can be transferred to another sibling, or a parent can use them for their own continuing education.” And even if your student is lucky enough to receive a full-tuition scholarship, she points out, there are still many costs remaining, such as room and board, textbooks, fees, and computer equipment. The savings in your 529 plan can be used toward all of these items to help close the gap on what their scholarship doesn’t cover. And, says Cunningham, “There’s no shelf life on these funds, so you won’t ever lose the money you’ve saved.” 

Objection #4: I’ve waited too long to start saving for college, and now there’s no point.

FACT:  Yes, it’s ideal to start saving when your child is young, but it’s never too late to save. Cunningham is a fan of the Nike strategy: “Just do it,” she says. “Even putting as little as $25 per month toward their 529 plan will add up over time. That might be as simple as skipping one pizza night per month to make that contribution.” Need a little incentive to get started now? This interactive tool helps you see the cost of waiting to save.

It also helps to have a goal. “Perhaps your goal is to try to save for half of the tuition of a public in-state school for your child, and to use loans for the rest,” says Gorrell. To help you figure out what amount you’ll need to contribute to reach that goal, try this customizable College Savings Planner.

But even if you don’t reach that goal by the time they start school, all is not lost.

“You can now use up to $10,000 from your 529 plan to repay student loans, so even if you got started late, you can help pay off some of the cost of your student’s education after they graduate,” says Gorrell. 

The bottom line, says Gorrell, is that “you’re always going to be happy that you saved.”

Jennifer Proe was a writer and editor with Your Teen Media. 

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