More than ever, Americans are saving for their kid’s college education. Published reports show that half of families with children under the 18 years of age are saving for college. According to Sallie Mae, wealthy American’s savings average $27,446 while middle income families show an average college savings account balance of $12,241. Lower income family savings still lag far below above levels and currently stand at $3,792.
Many Americans indicate that they don’t have enough money to save for college. Some families expect their kids to qualify for financial aid and therefore, not making an effort to save for college. Surprisingly, some thinks that it is their kids responsibility to pay for college and therefore, not saving for college at all.
Where savers put their money differs among income spectrum. About 45 percent of savers put the money in saving accounts and only about 29 percent use 529 College Savings Plans. Others keep the money in their retirement accounts while some opt for checking accounts. Most common problems associated with saving for college is lack of understanding of efficient vehicles available for college savings and underestimation of college cost. The 529 plans offer the most tax efficient way to save for college.