While most parents feel a college education is critical for their child's success, a recent study by AllianceBernstein Investments shows that 70 percent of parents do not have a comprehensive college savings plan. Jean talks with Jennifer DeLong and David Levi of AllianceBernstein about college savings options, as well as what can happen if parents don't save up.
Jennifer says that according to the study, parents were shown to have unrealistic expectations for financial aid, and as a result, kids were graduating with a large amount of debt. The study surveyed 1,500 recent graduates between the ages of 21 and 35, and showed that of the two-thirds with college debt, the average amount was $30,000. Jennifer says these unmanageable levels of debt affect grads both financially and psychologically, and can cause a delay in the "rites of passage" of adulthood—getting married, buying a home, having a family, and saving for their own retirement.
In addition to not properly saving for their children's education, Jennifer says parents are not fulfilling their own retirement goals. So what should parents do? David says a little inertia goes a long way. By simply creating a plan, parents can begin making progress towards their children's college savings. Parents also need to change their "living for the now" perspective and start thinking about long-term goals. Consider seeking the help of an adviser, David says, and get informed about 529 college savings programs in your state. Don't count on grants or financial aid to pay for the bulk of your child's college costs, he says.