Saving For The Kids' Education
April 15, 1999
A survey by a state treasurers association concludes that most parents aren't saving enough for their children's college education. Nor are they taking advantage of pre-paid tuition plans offered by many states.
- Some 73 percent of 1,000 parents surveyed say they are saving for college -- but the remaining 27 percent say they are not, because they can't afford to do so.
- Only about one-third of parents who responded were aware of the tax benefits of pre-paid tuition plans -- which defer taxes until the money is used when a student starts college.
- About half the savers rely on passbook savings accounts, even though the prepaid plans offered in 44 states lock in current tuition prices.
- The College Savings Plans Network, which conducted the study and is part of the National Association of State Treasurers, contends that bank savings accounts are a poor savings vehicle because they "are not even keeping up with the rate of inflation" and because "the temptation is always there to spend the account for other family expenses."
The study found that savings habits varied. About 44 percent of parents deposited money monthly, 14 percent weekly, 13 percent annually and 7 percent quarterly. About 22 percent set aside college money for their children on birthdays and holidays.
Source: Andrea Billups, "Families Aren't Saving Enough for College, or Doing it Wisely," Washington Times, April 15, 1999.
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