According to a recent survey from Savingforcollege.com, college savings has not changed drastically since the start of the pandemic and college savers are still on track. The Coronavirus pandemic sparked market volatility, job loss, economic uncertainty and a decrease in college enrollment – all circumstances which could have impacted priority and ability to save for college.
Despite the chaotic, unpredictable year most people have faced, there has not been much change in college saving.
Here are some of the key findings:
Parents are still saving for college: 67% of respondents have not made any changes to their 529 plan contributions, and 15% have even increased the amount they are contributing.
Optimism is still high for college savings: 70% report the same level of confidence that they will be able to reach their savings goals since the start of the year, and 6% are even more confident. However, two-thirds feel more anxious than in previous years.
Few have halted college saving efforts: Despite market volatility and high unemployment, only 13% have stopped making contributions and 5% have decreased contributions. One percent have liquidated their plans since February. Of note, 22% of the respondents have experienced a job loss or income reduction in their household since the start of the year.
College savers are staying on course: 86% have not made changes to their asset allocation this year. For those saving for college in an account other than a 529 plan, 45% are still contributing the same amount as before and 10% are contributing more than before.
Some seeing an increase in 529 value: 50% report that their 529 plan has increased in value since January 1, 2020, while 15% have decreased, 15% have seen no change, and 20% aren’t sure. We conducted the same survey in April and found that 65% reported a decrease in their 529 plan since January 2020.
Waiting out the pandemic: 14% of respondents have delayed taking a qualified distribution from their 529 plans to allow time for the investments to recover from stock market losses.
529 accounts are in future plans: 41% have delayed opening a 529 plan account with the uncertainty of the year, but 78% expect to open a 529 college savings plan in the future.
Financial advisors report saving is still a priority: The financial advisor respondents report interest in saving for college remaining the same despite the current economic uncertainty (84%) and 9% report more interest in college savings. 82% report no asset allocation change requests from clients, too.
A total of 1,137 Saving For College readers responded to the survey, who have a strong interest in college savings. The survey results are statistically significant with a confidence interval of +/- 2.9% at the 95% confidence level. 76% of the respondents are saving for their children and 16% for their grandchildren. One third have annual household income less than $100,000. The same survey concluded that parents are more anxious about returning to school this year, with concerns about quality of virtual learning, keeping children and family safe while returning to school, managing virtual learning while working from home, and the costs of going back to school.
What to Do If You Haven’t Started Saving
- How to Open a 529 Plan
- How Do I Select the Right Investments for My 529 Plan?
- How Much to Save For College