More Parents Are Saving for College and They’re Saving More Money, Reports ‘How America Saves for College 2016’ by Sallie Mae and Ipsos

Millennial Parents More Committed to Saving for College than Older
Counterparts

Most Parents Still Choosing General Savings Accounts Over 529
Plans to Save for College

NEWARK, Del.–(BUSINESS WIRE)–The number of parents saving for college and the amounts they are saving
are at four-year highs, according to “How America Saves for College
2016,” the national study released today by Sallie Mae — the nation’s
saving, planning, and paying for college company — and Ipsos, an
independent global market research company.


“How America Saves for College 2016” finds that 57 percent of parents
are saving for college, up from 48 percent in 2015, and the average
amount they have saved is $16,380, up from $10,040 last year. More than
half (55 percent) of parents feel confident they will be able to meet
the cost of college, up from 42 percent in 2015. In addition, 88 percent
of parents who have set a savings goal are confident they will meet
their goal. Nearly half of parents with a goal (46 percent) are making
saving for college a habit by using auto-deposit.

“The higher levels of optimism, confidence, and savings evident in this
research correspond with other economic trends we are seeing, such as
declines in unemployment and increased optimism about the economy among
the U.S. public,” said Julia Clark, senior vice president, Ipsos Public
Affairs. “The findings from this year’s study really highlight the
different ways that different generations view and value a college
education — and, critically, their differing approaches to financial
planning when it comes to their children’s future.”

Millennials committed to saving for college

Millennial parents — age 35 or younger — feel more confident (64
percent) than other generations about meeting the cost of college and
they are more committed to saving for college. More Millennials are
saving (65 percent, vs. 50 percent of Gen X parents and 61 percent of
Baby Boomer parents), and Millennials have saved more money ($20,155, on
average, vs. $12,428 for Gen Xers and $18,323 for Baby Boomers).
Forty-four percent of Millennial parents are using 529 plans, compared
with 36 percent of Gen Xers and 23 percent of Baby Boomers. When it
comes to paying for college, nearly four in ten (38 percent) Millennial
parents believe the parent should be solely responsible, compared to 26
percent of Gen Xers and 18 percent of Baby Boomers.

Use of 529 college savings plans improving but still far behind

While use of 529 college savings plans among parents rose to 37 percent,
up from 27 percent the prior year, these tax-advantaged plans still lag
far behind general savings accounts, despite the fact that those who use
529 plans save roughly 25 percent more, on average. More than six in 10
parents (61 percent) use general savings accounts and 38 percent use
checking accounts to save for college. More than half of the parents
saving for college but not using 529 plans say they are not aware of
these tax-advantaged plans.

More than half of parents have a plan to pay for college

The proportion of parents with a plan to pay for college rose to 51
percent in 2016, up from 42 percent in 2015, and the highest in the
history of the study. Parents with a plan save significantly more for
college: $18,389, on average, compared to the $10,468 reported by
parents who don’t have plans. Parents are also optimistic that having a
plan will ensure their child attends college. Nearly three-quarters (71
percent) agree students are more likely to attend college if they know
some college savings have been set aside for them. In addition, the
majority of parents (85 percent) are willing to stretch themselves
financially to make college happen.

“Preparing for college requires a significant personal and financial
commitment, and it is very gratifying to see so many parents, and
especially younger parents, taking proactive measures to make college
possible and more affordable,” said Raymond J. Quinlan, chairman and
CEO, Sallie Mae. “The attitudes and actions revealed in ‘How America
Saves for College 2016’ are tangible evidence of the value parents
ascribe to higher education.”

“How America Saves for College 2016” reports the results of online
interviews Ipsos conducted in May and June 2016 of nearly 2,000 American
parents with at least one child younger than age 18. The report and a
related infographic are available at www.SallieMae.com/HowAmericaSavesForCollege.

Sallie Mae recommends the 1-2-3 approach to saving for college: first,
open a savings account; second, set a goal and make deposits regularly;
and third, explore tax-advantaged options such as 529 college savings
plans.

Join the conversation at Facebook.com/SallieMae
or #HowAmericaSaves.

About Ipsos

Ipsos is an independent market research company controlled and managed
by research professionals. Founded in France in 1975, Ipsos has grown
into a worldwide research group with a strong presence in all key
markets, and is the world’s third largest survey-based market research
company. Ipsos delivers insightful expertise across five research
specializations: advertising, customer loyalty, marketing, media, and
public affairs research. Ipsos has been listed on the Paris Stock
Exchange since 1999 and generated global revenues of €1.785 billion
(1.990 billion USD) in 2015. Visit http://www.ipsos-na.com
to learn more.

About Sallie Mae

Sallie Mae (NASDAQ: SLM) is the nation’s saving, planning, and
paying for college company. Whether college is a long way off or just
around the corner, Sallie Mae offers products that promote responsible
personal finance, including private education loans, Upromise rewards,
scholarship search, college financial planning tools, and online retail
banking. Learn more at SallieMae.com.
Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are
not sponsored by or agencies of the United States of America.

Contacts

Sallie Mae
Rick Castellano, 302-451-2541
rick.castellano@salliemae.com
or
Ipsos
Julia
Clark, 202-560-2014
Julia.clark@ipsos.com

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