College Material

On a mission for tuition.
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This story appears in the April 1998 issue of Entrepreneur. Subscribe »

Most people agree that a college 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 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 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.

It Takes Two

This alliance means free assistance for entrepreneurs.

Visa U.S.A. and the Service Corps of Retired Executives (SCORE) have formed an alliance to provide entrepreneurs with a wider array of financial assistance. The first products to come out of the partnership are two free workbooks.

According Susan Forman of Visa, How to Choose the Best Bank for Your and How to Secure Financing were created as a result of requests from entrepreneurs. "They are geared to small businesses," says Forman. "In How to Secure Financing, you'll learn how to calculate your financial needs, forecasts and projections as well as how to put together a polished package to present to a lender." How to Choose the Best Bank for Your Business discusses how to select an institution interested in building a relationship.

In addition to the workbooks, Visa has added a small-business element to its Web site ( Here, you can learn about legislative and tax concerns, plus other issues pertinent to entrepreneurs.

The workbooks are available from any SCORE chapter or by calling Visa at (650) 432-3200.

Record Highs

Small- lending is on the rise, according to the SBA:

  • In fiscal year 1997 (which ended September 30), the SBA approved 45,288 loan guarantees totaling $9.46 billion in the 7(a) General Business Loan Guaranty program--a 23 percent increase over fiscal year 1996. Combined with the 4,131 loans ($1.44 billion) under the Certified Development Company Loan program, the $10.9 billion total exceeds the fiscal year 1996 mark of nearly $10.2 billion.
  • A record 10,600 loans were made to minority owned firms in fiscal year 1997. Similarly, a record 10,800 loans were made to women-owned firms in the same time period.

Contact Source

Duff Ferguson, c/o Alliance Capital Management LP, 1345 Ave. of the Americas, New York, NY 10105,


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