While 30% of parents aren’t sure what the full
sticker price of college will cost them, 77% of parents agree the
value of a college education is worth the cost.
New SECURE Act 2.0 legislation gives families
greater flexibility for their 529 savings.
American families say they’re committed to saving for college
despite rising costs and the impact of inflation as data from
Fidelity Investments® 2024 College Savings Indicator Study reveals
saving for college is a priority now more than ever. Nearly 3-in-4
parents (74%) have started saving in 2024 compared to 58% in 2007,
when the study was first conducted, and the majority (77%) agree
the value of a college education is worth the cost. Even so, 30%
aren’t sure what college will cost by the time their child enrolls
and more than half (55%) use “their own best guess” to estimate
costs.
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hypothetical example illustrates the potential value of different
regular monthly investments for different periods of time and
assumes an average annual return of 4.5% rounded to the nearest
$50. Contributions to a 529 plan account must be made with
after-tax dollars. This does not reflect an actual investment and
does not reflect any taxes, fees, expenses, or inflation. If it
did, results would be lower. Returns will vary, and different
investments may perform better or worse than this example. Periodic
investment plans do not ensure a profit and do not protect against
loss in a declining market. Past performance is no guarantee of
future results.
Factors outside of parents’ control continue to weigh heavily on
families’ minds. When it comes to saving for their child's
education, parents are most concerned about inflation and the
rising costs of college (93%), followed by changes to education
costs such as free tuition or student debt forgiveness (87%). In
fact, more than a quarter of parents (26%) say inflation is the
most significant barrier to their ability to save more for college
expenses.
“While parents prioritize their children’s college education,
the reality is that balancing day-to-day expenses with long-term
savings can be daunting,” said Tony Durkan, vice president, head of
529 Relationship Management at Fidelity Investments. “Fidelity
encourages parents to save what they can, when they can, with tools
such as a 529 plan that offer the flexibility and tax advantages
that may enhance a family’s ability to save.”
Parents say that saving for college is their top priority.
What’s more, nearly two-thirds (64%) of parents say they have a
plan in place to reach their college savings goals. The vast
majority (84%) say they’ll either continue their regular college
savings contributions or even increase the amount of their regular
contributions for the remainder of the year. Regular contributions,
even when small, can accumulate over time and help ease the
financial burden of rising costs.
Parents Have High Expectations About Paying for
College
As the total cost of college continues to rise to more than
$41,000 for a public four-year out-of-state institution, parents
are increasing the amount they plan to pay for their child’s
education. However, while parent’s expectations may have increased,
they’re still falling short on funding their intended college
savings goal – an important step in long-term financial mobility.
Parents hope to pay for 67% of their child’s education, (up from
65% in 2020), but are only on track to meet 30% of that goal (down
from 33% in 2020).
New Legislation Makes 529 Plans Even More Flexible
While many parents expect their child to attend some form of
higher education, a sizeable 35% admit their child has expressed
the possibility of not doing so – leaving many parents questioning
the fate of their hard-earned 529 plan savings. Fortunately, new
legislative changes may ease some of these concerns, as under
certain conditions, 529 plan assets can now be transferred to a
Roth IRA for the beneficiary – giving them a retirement boost1. The
529 account must be open for more than 15 years before being
eligible for the rollover, which will be subject to annual Roth
contribution limits and an aggregate lifetime limit of $35,000. In
addition, the transfer amount must come from contributions made to
the 529 account at least five years prior to the 529-to-Roth IRA
transfer date. This new rule can help 529 account owners avoid
taxes and penalties for withdrawals and can be particularly
appealing for people looking to help their children get a head
start on retirement.
“Leveraging savings tools such as a 529 plan can make a
substantial difference when it comes to easing the financial burden
for college,” says Durkan. “Thanks to recent legislation like
SECURE 2.0, 529 plans have become even more flexible and enticing
as a savings vehicle for parents.”
The Importance of Having a Plan
While saving for college is a top priority among parents (and
many have a plan for achieving college savings), more than
one-third (36%) do not have a financial plan in place to meet their
broader goals. As a financial services firm dedicated to helping
people live better lives, Fidelity has a long-standing commitment
to providing resources and education, to help the next generation
make informed financial decisions. Fidelity’s Planning and Guidance
Center offers a comprehensive financial tool to help families
balance saving for college with other financial priorities. For
families who prefer additional support and guidance, financial
professionals can be especially helpful – in fact, more than
8-in-10 parents with a financial advisor say working with one gives
them peace of mind about the college planning process.
Among those with children nearing college age, two-thirds (68%)
believe their child understands how much their total college
education could cost, and the total potential amount of student
loan debt they may incur, yet 26% have not discussed the total cost
of college with their child and 35% have not discussed the amount
of student debt that their child may incur following graduation.
Simply starting the conversation can help. Fidelity’s study found
that most parents who have talked to their child have started
saving (80% vs 61%). Additionally, 44% of parents who have talked
to their child have opened a 529 account compared to the 29% who
have not, and parents who have talked to their child have even
saved more on average – $20,000 compared to $12,000 for those who
have not had the conversation.
Additional Findings and Resources for College Savers:
- Fidelity is committed to reducing barriers to saving and paying
for education. Since 2019, Fidelity’s Goal Booster has been helping
employees accumulate savings and better prepare for unexpected
financial events. For those who need help starting a goal of saving
for college, there is good news—through an integration with
Fidelity’s 529 college savings. Goal Booster now helps employees
start and reach their savings goals for eligible education
expenses, right from their paycheck.
- Nearly three-quarters (71%) of parents agree that concerns
about student loan debt is a motivating factor in saving for their
children’s college education. Yet parents continue to underestimate
the amount of student debt children will incur. To help families
understand the true cost of student loan debt, Fidelity offers
tools and resources at Fidelity.com/StudentDebtHelp.
- In addition to providing college-planning products and tools,
Fidelity has a legacy of supporting its nearly 75,000 associates
and the community with access to educational opportunities.
Fidelity provides competitive tuition reimbursement benefits, and
its student debt benefit to employees. In the community, Fidelity
focuses on providing financial education and access to education to
historically underserved populations, knowing that education can
improve long-term financial mobility. Learn more about career
opportunities available at Fidelity today or about Fidelity’s
student loan debt assistance benefit.
Need assistance in your college planning? Fidelity can
help.
- Call us at 1-800-544-1914 for complimentary access to dedicated
college planning representatives
- Get our Viewpoints on college planning at
www.fidelity.com/learning-center/life-events/prepare-for-college
- Access our College Savings Resource Center at
www.fidelity.com/saving-for-college/overview
- Find a Fidelity Investor Center near you at
www.fidelity.com/branchlocator/
- Ask friends and family to contribute to your child’s college
savings fund at www.fidelity.com/529-plans/college-gifting
About the 2024 College Savings Indicator Study
As part of the study, Fidelity conducted a survey of parents
with college-bound children of all ages. Parents provided data on
their current and projected household asset levels including
college savings, use of an investment advisor and general
expectations and attitudes toward financing their children's
college education. Using Fidelity's proprietary asset-liability
modeling engine, the company calculated future college savings
levels per household against anticipated college costs. The results
provided insight into the financial challenges parents face in
saving for college. Any mentions of children “nearing college”
refer to questions for parents of children either 15 years of age
or older or 10th grade and higher. Data for the Indicator (number
of children in household, time to matriculation, school type,
current savings and expected future contributions) was collected by
Boston Research Technologies, an independent research firm, through
an online survey from April 15 – May 7, 2024, of 1,985 families
nationwide with children high school age and younger who are
expected to attend college or other further education. The survey
respondents had household incomes of at least $30,000 a year or
more and were the financial decision makers in their household.
Respondents are weighted to correct for any imbalances between the
sample and the population of parents intending to send their
children to college. College costs were sourced from the College
Board's Trends in College Pricing 2023. Future assets per household
were computed by Fidelity Personal and Workplace Advisors LLC
(FPWA), a registered investment adviser and a Fidelity Investments
company. Within Fidelity’s asset-liability model, Monte Carlo
simulations were used to estimate future assets at a 75 percent
confidence level. The results of the College Savings Indicator may
not be representative of all parents and students meeting the same
criteria as those surveyed for the study.
About Fidelity Investments
Fidelity’s mission is to strengthen the financial well-being of
our customers and deliver better outcomes for the clients and
businesses we serve. Fidelity’s strength comes from the scale of
our diversified, market-leading financial services businesses that
serve individuals, families, employers, wealth management firms,
and institutions. With assets under administration of $14.1
trillion, including discretionary assets of $5.5 trillion as of
June 30, 2024, we focus on meeting the unique needs of a broad and
growing customer base. Privately held for 78 years, Fidelity
employs more than 75,000 associates across the United States,
Ireland, and India. For more information about Fidelity
Investments, visit
https://www.fidelity.com/about-fidelity/our-company.
Please carefully consider the plan's
investment objectives, risks, charges, and expenses before
investing. For this and other information on any 529 college
savings plan managed by Fidelity, contact Fidelity for a free Fact
Kit, or view one online. Read it carefully before you invest or
send money.
**Units of the portfolios are municipal
securities and may be subject to market volatility and
fluctuation.**
Keep in mind that investing involves risk.
The value of your investment will fluctuate over time, and you may
gain or lose money.
Views expressed are as of the date
indicated, based on the information available at that time, and may
change based on market or other conditions. Unless otherwise noted,
the opinions provided are those of the speaker or author and not
necessarily those of Fidelity Investments or its affiliates.
Fidelity does not assume any duty to update any of the
information.
**IMPORTANT: The projections or other
information generated by the Planning & Guidance Center's
Retirement Analysis regarding the likelihood of various investment
outcomes are hypothetical in nature, do not reflect actual
investment results, and are not guarantees of future results. Your
results may vary with each use and over time. **
The student debt program is not a product or
service of Fidelity Brokerage Services.
# # #
Fidelity Brokerage Services LLC, Member NYSE,
SIPC 900 Salem Street, Smithfield, RI 02917
Fidelity Distributors Company LLC 900 Salem
Street, Smithfield, RI 02917
National Financial Services LLC, Member NYSE,
SIPC 245 Summer Street, Boston, MA 0211
1149920.1.0 ©2024 FMR LLC. All rights reserved.
______________________________ 1 Beginning in January 2024, the
SECURE 2.0 Act of 2022 (the “Act”) provides that you may transfer
assets from your 529 account to a Roth IRA established for the
Designated beneficiary of a 529 account under the following
conditions: (i) the 529 account must be maintained for the
Designated Beneficiary for at least 15 years, (ii) the transfer
amount must come from contributions made to the 529 account at
least 5 years prior to the 529-to-Roth transfer date, (iii) the
Roth IRA must be established in the name of the Designated
Beneficiary of the (continued) 529 account, (iv) the amount
transferred to a Roth IRA is limited to the annual Roth IRA
contribution limit, and (v) the aggregate amount transferred from a
529 account to a Roth IRA may not exceed $35,000 per individual. It
is your responsibility to maintain adequate records and
documentation on your accounts to ensure you comply with the
529-to-Roth IRA transfer requirements set forth in the Internal
Revenue Code. The Internal Revenue Service (“IRS”) has not issued
guidance on the 529-to-Roth IRA transfer provision in the Act but
is anticipated to do so in the future. Based on forthcoming
guidance, it may be necessary to change or modify some 529-to-Roth
IRA transfer requirements. Please consult a financial or tax
professional regarding your specific circumstances before making
any investment decision.
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Fidelity Media Relations FidelityMediaRelations@fmr.com Katie
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