Most people agree that a college education is a critical component of a child's future success. However, the majority of American parents do not save for their children's education. So reports a Lou Harris & Associates poll conducted in 1997 for Alliance Capital Management LP, a New York City investment management company.
According to the quarterly Alliance Capital Financial Preparedness survey, 89 percent of parents considered saving for college a worthwhile investment, but only 47 percent said they regularly put aside money for this purpose or have in the past.
When the study looked at the parents' ages, an interesting picture emerged. An estimated 68 percent of Generation X moms and dads are saving regularly for their children's college education, compared with 51 percent of parents ages 30 to 49 and 36 percent of parents ages 50 and older. Gen Xers also began saving when their child was younger--an average of 2.5 years vs. 7.2 years for Boomers and 11 years for older parents.
"There are a few reasons Generation X parents are doing better," says Duff Ferguson, assistant vice president at Alliance Capital and coordinator of the poll. "When young people come out of school and start out in the workplace, they're given information on 401(k)s and told they'll be responsible for their own retirement needs."
These younger investors know that if they don't start planning now, they--and their children--could be in trouble later.
"The other piece to this [puzzle] is [Gen Xers] know a college education is now the standard and that it's much more expensive," adds Ferguson.
Consequently, firms wanting to attract younger employees should offer benefit packages that contain savings options. And companies with older workers may do well to stress financial education and provide information on college savings programs.