“Paying for your child’s education is a laudable goal, but may not be realistic for some parents who could wind up jeopardizing their own financial future in order to help put their sons and daughters through college.
Parents who are saving for college frequently raid retirement funds — or plan to do so — to pay their child’s skyrocketing tuition bills, according to a new study released today from the nation’s largest student loan provider Sallie Mae. More parents are currently saving for their retirement than for their children’s education, but these families often plan to draw from retirement savings to help cover the costs of college, especially as other goals — from building up a “rainy day” fund to increasing general savings — take priority. “The economy is putting pressure on families in terms of whether they’re saving, how much they’re saving and where they’re saving,” said Sarah Ducich, senior vice president for public policy at Sallie Mae.
The report “How America Saves For College” surveyed more than 1,600 parents with children ages 18 or younger and found half of parents said they were focused on college savings, while 60 percent were focused on saving for retirement. But if they have to choose, parents are opting to boost their retirement savings — 42 percent of parents who are not saving for college said they are saving for retirement.
The good news: More than three-quarters of those parents surveyed who are saving for college are also focused on saving for retirement.
The bad news: Many of those families who say they are saving for college also admit that they are doing so through their retirement fund. One-third intend to use these savings for college. The other two-thirds say that they would use their retirement savings to pay for college, only if necessary….”
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