At the same time student debt has reached record levels across the country, families are saving more than ever in anticipation of their children’s college education.
The average amount of money parents and grandparents placed in 529 college saving plans reached an all-time high of $17,174 in 2012, a 11.9 percent increase from the previous year, according to a report released today from College Savings Plans Network, a nonprofit working to improve 529 plans at both a federal and state level.
In total, investments in 529 plans jumped to $190.7 billion, a 15.7 percent increase from 2011.
(A 529 savings plan, which is available in 49 states and the District Of Columbia, encourages savings for future education costs by allowing families to defer paying taxes, according to the Securities Exchange Commission. But critics have taken issue with the popular plans, which often have been found to not disclose information about performance or the fund managers overseeing them.)
Despite their best intentions, parents haven't been able to shield their children from skyrocketing tuition costs and student loan debt, the latter of which now totals nearly $1 trillion nationally. As of this February, student debt stood at $966 billion, with a 70 percent increase in both the average debt per person and the number of borrowers.
“The cost of college has risen faster than any other expense families are facing these days and that can’t continue.” Michael Fitzgerald, chair of the College Savings Plans Network and Iowa state treasurer, told The Huffington Post. “Families are doing everything they can to save and avoid these kinds of debts but it is getting out of reach for a lot of families, especially low income families.”
As more families prioritize college savings, other savings accounts across the country appear to be suffering. Nearly half of Americans have less than $500 in savings, and more than 60 percent of Americans live paycheck to paycheck. In addition, 49 percent of Americans polled in a recent survey revealed that they do not even have enough money to cover three months of expenses in case of an emergency.
Fitzgerald attributed this stark discrepancy between education and other savings plans to the American value in education.
“Elderly folks, they will tell me that it is more important for them that their child get a good education rather than they are prepared for retirement,” he said.