College savings down 25%

A new report from loan-corporation Sallie Mae shows 9 out of 10 Americans say college is an important investment, but that same report also says less than half are saving for it.

A Salisbury mother tells 47 ABC, “We’ve thought about it but we haven’t prepared at all. Not even started…not even, nothing.”

“We just made sure to save money every month. Set it aside and not ever touch it.” Says another Salisbury woman.

The report further reveals those parents who are saving for college are reportedly saving less than 25% than they did in the past years.

Stephen Hill is an investment advisor at Livingston and Hill in Salisbury. The father of three says two of his children are currently enrolled out-of-state.

“We pay more in tuition than most Americans make,” explains Hill.

According to CollegeBoard.org, the average tuition of a public four-year institute for an out-of-state student is nearly 23,000 dollars. If room and board is also added into the equation, that’s typically another 10,000 dollars.

Hill tells 47 ABC college inflation has out-paced the average wage earned by the head of a household, so other necessities might take priority and saving for college may take a backseat.

“It could be a feeling of despair that they can’t pay for all the college, so they pull back but college is so expensive.” Says Hill.

Hill recommends any parent to set aside funds for college every month and starting that process early.

“It’s hard to think that your kid is going to college when they’re one or two years old but in most families, they assume that’s going to occur.” Explains Hill. “Don’t wait until the kids are in high school.”

There are a number of savings programs designed to help parents start saving early like the 529 plan, which offers tax-deferred earnings growth and tax-free distributions; however, the rules about purchasing a plan and using the money can be confusing. It’s another why experts recommends reaching out to an advisor for help.

Hill also says sometimes loans are the only option. He recommends familiarizing yourself with the free application form for student aid (FAFSA) by the time a student is in middle school.

For more information on how to save for college, click here.