Earlier this month, thousands of college grads entered the “real world” burdened with crushing student loan debt. How well I remember the feelings I had three years ago as I looked at my amassed student loans and balanced them against my Master’s degree. I still feel a twinge of anxiety when I look at how far I still have to go to pay off my student loan obligations.
And I’m not the only one. Many Americans are looking at the increasing costs associated with college funding, and it is affecting their decisions. Consider this, from the COUNTRY Financial survey:
- 81% of Americans start saving for college on behalf of their children before they enter elementary school (or even before they are born).
- 24% use a Coverdell Savings Account or a 529 plan.
- 81% still view college funding as good financial investment.
- 47% believe that saving for retirement is more important than college funding for their children.
These trends are interesting. If you are planning to help with your child’s college funding, it is a good idea to take advantage of the tax benefits offered through Coverdell or 529 plans. These will also help you save at an increased pace.
I also think it’s a good thing that parents are starting to worry more about saving for retirement. This probably has a lot to do with recent worries over a recession. While it is daunting, many kids can pay for their own college. And they’ll have time to pay off their loans. Saving for retirement includes a much more limited timescale. Make sure you are in a good financial position first — before you risk your future for college funding.