Report Highlights. As the cost of a college education increases so too does the amount of money parents are saving for college – nearly $6,354 more over a 5-year span.
- Americans on average want to save $55,342 for their child’s college expenses.
- On average, parents saved $5,507 last year for their kid’s college.
- 30% of saving accounts are 529 plans – the largest majority.
- On average, Americans have saved $28,953 in their 529 accounts.
General Statistics
Americans generally put only 40% of their college savings into a college-specific savings account. The amount of savings parents put into their child’s college account highly depends on income level as well as race. Only a minority of families that save for college speak to their child about cost-reduction strategies.
- On average, parents save $5,507 annually for their kid’s college.
- 39% of parents have talked with their child about how the cost may affect which college they can afford.
- 30% of parents have discussed whether their child will live at home or at school based on the cost of college.
- 75% of families use parental savings accounts to help pay for college.
- 56% of families use student savings accounts to help pay for college.
Parental Saving Statistics
As the main driving force behind college savings, nearly 2/3rds of parents who expect their child to attend college are saving or creating plans to cover the costs. Parents do not typically consult financial experts on how to save for college. As a result, parents may overestimate how much of the cost they can actually cover.
- 64% of parents are either saving, planning, or doing both for college.
- 36% of parents are neither planning nor saving.
- 69% of families will not use retirement savings for college.
- 21% of families will use retirement savings if needed.
- Americans seek to save $55,342 on average for their child’s college expenses.
- On average, parents expect to pay roughly 30% of their child’s college expenses.
- On average, parents actually pay 10% of their child’s college expenses.
529 Plans
Also known as Qualified Tuition Programs, 529 Plans derive their name from section 529 of the IRS tax code. Each state except Wyoming has its own iteration of the 529 Plan. There are two types of 529 Plans – savings plans and prepaid tuition plans.
- There are 15.81 million 529 accounts in the nation.
- Those 15.81 million accounts amount to $457.7 billion.
- On average, Americans have saved $28,953 in their 529 accounts.
- There are 7,526 private accounts associated with national college 529 Plans.
- The 7,526 accounts amount to $389.1 million.
- 38% of parents were aware of 529 plans.
- Consequently, 54% of parents were unaware of 529 plans.
| State | Number of 529 Accounts | Total Cash Amount |
|---|---|---|
| Alabama | 119,787 | $2.48 Billion |
| Alaska | 323,250 | $10.46 Billion |
| Arkansas | 49,557 | $1.24 Billion |
| Arizona | 98,860 | $1.97 Billion |
| California | 377,531 | $12.6 Billion |
| Colorado | 389,253 | $11.2 Billion |
| Connecticut | 184,358 | $9.39 Billion |
| Washington DC | 36,904 | $948 Million |
| Delaware | 23,300 | $595 Million |
| Florida | 604,617 | $14.2 Billion |
| Georgia | 214,124 | $4.67 Billion |
| Hawaii | 5,247 | $103 Million |
| Idaho | 45,752 | $782 Million |
| Illinois | 531,330 | $17.3 Billion |
| Indiana | 418,043 | $6.63 Billion |
| Iowa | 302,282 | $6.64 Billion |
| Kansas | 301,199 | $9.75 Billion |
| Kentucky | 95,304 | $1.68 Billion |
| Maine | 450,314 | $13.3 Billion |
| Maryland | 360,832 | $9.88 Billion |
| Massachusetts | 246,694 | $8.46 Billion |
| Michigan | 384,284 | $9.64 Billion |
| Minnesota | 86,968 | $1.85 Billion |
| Mississippi | 30,538 | $616 Million |
| Missouri | 186,375 | $4.01 Billion |
| Montana | 13,510 | $223 Million |
| Nebraska | 296,926 | $6.73 Billion |
| Nevada | 1,004,022 |
$75.7 Billion |
| New Hampshire | 883,193 |
$23.6 Billion |
| New Jersey | 257,872 | $6.54 Billion |
| New Mexico | 112,173 | $2.50 Billion |
| New York | 1,245,646 | $44.8 Billion |
| North Carolina | 168,284 | $3.67 Billion |
| North Dakota | 49,796 | $612 Million |
| Ohio | 681,975 | $16 Billion |
| Oklahoma | 76,295 | $1.4 Billion |
| Oregon | 219,878 | $4.79 Billion |
| Pennsylvania | 261,569 | $6.81 Billion |
| Rhode Island | 179,600 | $4.85 Billion |
| South Carolina | 213,309 | $5.69 Billion |
| South Dakota | 25,014 | $970 Million |
| Tennessee | 23,093 | $280 Million |
| Texas | 108,702 | $2.45 Billion |
| Utah | 463,315 | $20 Billion |
| Vermont | 27,010 | $583 Million |
| Virginia | 3,028,848 | $97 Billion |
| Washington | 91,481 | $2.38 Billion |
| West Virginia | 115,555 | $3.09 Billion |
| Wisconsin | 328,348 | $7.05 Billion |
Other Savings Accounts
For this section, the type of education savings accounts being referred to is a Coverdell account. Another account used for college savings is an IRA – which stands for an investment retirement account. Traditionally used for retirement, IRAs can also be used for college savings. Traditional savings accounts are also used for college savings, they offer the most flexibility with how the funds can be used – they need not be spent strictly for educational expenses.
- Coverdell ESA assets have invested $7 billion in mutual funds.
- In 2013, 6% of individuals between the ages of 25-55 made unpenalized early withdrawals from their IRAs – higher education was cited as a reason for early withdrawals.
- The 6% of individuals between the ages of 25-55′ withdrew roughly $20 billion.
- Americans on average save $226 annually in CD accounts for college.
- Americans on average save $99 annually in cryptocurrency for college.
- Americans save on average $1,008 a year in general savings accounts for their child’s college.
- Parents save $411 annually in investment accounts.
Racial Saving Statistics
This dataset covers statistics for White, Black, and Hispanic populations. On average, White families have more money saved up for college followed by Black families and then Hispanic families.
- 31% of White families’ college saving funds are in 529 accounts.
- 17% of Black families’ college saving funds are in 529 accounts.
- 17% of Hispanic families’ college saving funds are in 529 accounts.
- White families seek to save $55,124 for college.
- Black families seek to save $56,541 for college.
- Hispanic families seek to save $41,204 for college.
- White families save on average $6,211 annually for college.
- Black families save on average $4,079 annually for college.
- Hispanic families save on average $3,930 annually for college.
| Race | Confident | Not Confident |
|---|---|---|
| White | 49% | 51% |
| Black | 55% | 45% |
| Hispanic | 55% | 45% |
Savings by Family Education Level
In general, the higher the parents’ education level, the more they will save for their child’s future college expenses. Education level also affected how much parents think they need to save to secure their child’s college expenses.
- Parents without a college degree predominantly invest in pre-paid plans – roughly 26%.
- Parents with an Associate’s degree mostly invest in 529 plans – 13% of them.
- Parents with a Bachelor’s degree mostly invest in 529 plans – 38% of them.
- Without a degree, families seek to save $35,984 for their kids’ college.
- With an Associate’s degree, families seek to save $32,091 for their kids’ college.
- With a Bachelor’s degree, families seek to save $74,767 for their kids’ college.
- Parents without a college degree save $4,338 annually.
- Parents with an Associate’s degree save $5,499 annually.
- Parents with a Bachelor’s degree save $6,978 annually.
| Education Level | Confident | Not Confident |
|---|---|---|
| No Degree | 41% | 59% |
| Associate’s Degree | 44% | 56% |
| Bachelor’s Degree | 66% | 44% |
College Saving Strategies
Some families implement strategies in order to save on the cost of college. The most popular strategy is to save money – which 56% of Americans implement.
- 22% of families plan to pay for college using life insurance.
- 14% of families plan to pay for college by finishing off their mortgage and freeing their income towards college expenses.
- 7% of families plan for their child to be employed with the college their child goes to.
- 14% of American families plan to save for college by limiting their choices to the most affordable colleges.
- 31% plan to save by budgeting the money they currently have.
- 4% expect to save money by applying for scholarships.
Sources
- Federal Reserve: Saving for College and Section 529 Plans
- College Savings Plan Network: 529 Plan Data
- FedFinancial Federal Credit Union: How Much Should I Save For College Calculator?’
- EdChoice: Education Savings Accounts (ESAs)
- Urban Institute: Understanding College Affordability, Covering Expenses, Savings’
- Congressional Research Service Report, Individual Retirement Account (IRA) Ownership: Data and Policy Issues
- Financial Industry Regulatory Authority (FINRA): ESAs and Custodial Accounts
- Sallie Mae 2022: How America Pays for College
- Sallie Mae 2018: How America Saves for College
- Coverdell Education Savings Accounts: FAQs | Investment Company Institute
- Tuition: Cost of Attendance | Cleveland Clinic Lerner College of Medicine
- Vagelos Scholarship Program
- Costs & Aid | Weil Cornell Medical College
- Types of Aid | UCLA Med School
- AAMC: US MD-Granting Medical School Applications and Matriculants by School, State of Legal Residence
- MCAT® Scheduling Fees | Students & Residents
- The Cost of Applying to Medical School | Students & Residents
- NBME: Taking the USMLE Licensing Exam
- UMich: Medical School Budget
- Tuition & Financial Aid | Cleveland Clinic Lerner College of Medicine