State Treasurer Bill Lockyer
California parents value a college education more than a good-paying job for their kids, but most have not started saving to help pay the costs of obtaining a higher education, according to a new survey conducted for ScholarShare, the state’s “529” college savings plan.
“The good news is parents realize the importance of a college degree to their kids’ future and economic prosperity,” said State Treasurer Bill Lockyer, who serves as chairman of the ScholarShare Investment Board (SIB).
“The bad news is higher education costs continue to rise, and most parents have not been able to start making preparations to help ensure their family can afford those costs. A ScholarShare account can help fill that critical financial need,” he said.
In the survey, conducted by Hart Research Associates, 84 percent of parents considered it “very important” that their children attend college. That’s a higher ranking than having a good paying job (75 percent) or owning a home (69 percent). Latino (93 percent), Black (88 percent) and Asian (90 percent) parents said attending college was “very important” at significantly higher rates than white parents (72 percent).
78 percent of parents said a college education was more important now than it was 10 years ago.
Another sign of the importance parents place on going to college: Asked what they would be willing to do to improve their current financial situation, more parents said they definitely or probably would be willing to delay their retirement (65 percent) or save less for their retirement (46 percent) than delay saving (45 percent) or save less (40 percent) for their kids’ college education.
But while parents consider a college education crucial, most are worried about being able to afford it and have not started saving to help pay the costs. 53 percent said they are “very concerned” about their ability to pay for their children’s higher education. Just 43 percent of parents have a college savings account, according to the survey, while 56 percent do not.
Named for the section of the IRS code under which they were created, 529 plans are highly regarded for their tax-advantaged status. Earnings on investments grow tax-deferred, and disbursements, when used for tuition and other qualified higher education expenses, are federal and state tax-free.
ScholarShare accounts may be opened with as little as $25, or $15 when combined with regular, automatic monthly contributions of at least $15.
ScholarShare accounts can be opened online at www.scholarshare.com. For information about the SIB, visit www.treasurer.ca.gov/scholarshare. ScholarShare is on Twitter and Facebook.