Facts of the Month

Planning for College Funding Realities

Most American parents underestimate what they could (and should) be doing to save for college, and a recent survey reinforced these findings. While it is true that most parents overestimate the amount of "free money" their students will receive, they also make lifestyle choices that can short-change college savings. According to a recent study by AllianceBernstein Investments, the majority of parents think colleges will provide them with a decent financial aid package. Meanwhile, 92% of financial aid administrators said parents overestimate the "free money" - scholarship and grant assistance - their students will receive. Furthermore, roughly 50% of parents surveyed cited spending more on vacations in the last year than they saved for college, and an even higher percentage said they spent more money eating out or getting takeout than they saved for college. All this suggests that to avoid the unfortunate "surprises" many families face in the spring of the senior year when aid packages begin arriving, parents must get a better handle on the college funding realities they and their students will face (and must plan/save accordingly).

(Data Source: New York Daily News, 28 November 2006)

Publication Date: January 2007