Personal Finance

This is how much students are saving to cover college costs

Parth Vohra, special to
Key Points
  • Students have saved close to $8,000 for their education, according to Allianz.
  • Parents are now saving less for their children’s college expenses, a new poll says.
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Parents: You might not have to open your checkbooks as much as you did. Students are now socking away more money towards their college tuition bill.

This year, college students are saving an average of $7,801, up 17 percent from $6,678 in 2017, according to the second edition of the Allianz Tuition Insurance College Confidence Index.

Mom and Dad, in turn, could save a little less for their children's education. That amount declined to $12,938 in 2018, down 12 percent from $14,690 in 2017.

The nationwide poll conducted in April surveyed 1,000 current and prospective college students as well as their parents, said Daniel Durazo, director of marketing and communications at Allianz Global Assistance, a Richmond, Virginia-based specialty insurance company.

“I think that, as a parent, it's great to see that students are taking a bigger responsibility in paying for their education,” Durazo said. “The more you personally have invested in your success, the more successful you will be because you know you’ll have something to lose.”

Given the cost of school these days, it’s also only fair that students chip in for their college expenses and not leave that burden solely on their parents, Durazo said.

The average tuition, fees, room and board during the 2017-2018 school year for in-state students at a four-year public school was $20,770, according to the College Board. The tab at private colleges is more than double that amount: $46,950.

In 2019, students are expected to save an average of about $9,127 toward college costs, as long as current trends continue, Durazo said. Parents' savings for their kids' educations could decline to roughly $11,385 in 2019.

Fear of dropping out

Despite the cost, about half of parents said they were "very confident" in their kids' ability to complete their education without permanently leaving school. That's down from 2017, when close to 60 percent of parents shared that sentiment.

The reason for the decline is that parents are becoming more pragmatic about the possibility of dropping out, Durazo said.

“Parents are realizing that things may not go as planned and they’ve certainly seen this probably with other members of their families or friends, where children enter college and they will not finish in four years," he said.

Students also remain uncertain of whether they will complete their degree.

“Students are very cognizant of things that may disrupt their education,” Durazo said. “They see it among their peers very frequently, so they bear daily witness to the things that can happen, that would make them have to leave.”

Finances the main cause for dropouts

“Unexpected changes in finances” was cited as the most probable reason for student withdrawal, according to the poll. This could be anything from a parent losing a job to a downturn in a family business, Durazo said.

The “mental health of a student” and “death of a parent” were cited as other reasons for dropping out, according to the poll.

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— By Parth Vohra, special to