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With student loans weighing heavily on some recent graduates and stunting the financial independence of many young millennials, it's no wonder moms and dads are committed to picking up more college costs.
In fact, the number of parents saving for college is at an all-time high. About 72 percent of American families are putting money aside for their children's higher education, according to Fidelity Investment's College Savings Indicator Study. That's a 24 percent increase from 2007, the first year Fidelity started tracking college savings.
On average, parents hope to pay for 70 percent of their children's total college costs, Fidelity said.
To that end, families reported saving a median of $3,000 last year, up from $1,500 when the survey was first conducted. Many more families are also now investing in 529 plans, which offer tax-advantaged investments to pay for qualified education expenses, Fidelity found, and those parents are contributing even more — saving a median of $3,500 last year.
Altogether, 529 savings plan assets rose to a record $242.7 billion as of June 30, a 3.4 percent increase from a year ago, according to a separate report by financial research firm Strategic Insight.
The median 529 plan account balance was $14,005 in the second quarter, up from $13,067 in the period last year, Strategic Insight said — an amount that would not cover one year of current in-state expenses at a public, four-year college.
Despite the increase in savings, "parents, on average, are still only on track to reach less than a third of their college funding goal by the time their child heads to campus," said Keith Bernhardt, Fidelity's vice president of college planning.
To make up the difference between what parents have saved and what school actually costs, most families will have to rely on current income, grants, scholarships and loans, Bernhardt said.
Of parents with children near college age, more than half said they could have saved more each month for school, Fidelity found. Most said they could have put away at least an additional $50 a month, which would have yielded nearly $20,000 over 18 years, assuming a 6 percent rate of return.