Good Tuition News
Alas, we're not talking about what most parents hope for: a lower tuition cost at the college your daughter or son is going to attend years from now. Inflation realities don't make that possible.
The good news is, in fact, that more parents are saving for junior's college education - and they're starting to save earlier. That means, if they invest wisely, more Americans are going to meet their goal of being ready to pay for the higher education that we all know pays back handsomely over a lifetime career.
A recent Lou Harris poll done for Alliance Capital Management discovered that this year 55 percent of adults surveyed were regularly saving money for college costs. That compared to 46 percent last year. And the saving starts earlier: This year the average age of a child when parents began to save was 3.8 years. That compares to 5.1 years in 1997. Statistically, such a sudden lowering of the average is likely caused by new parents plunging into saving.
As the president of the Alliance fund group distributors points out, that year and a quarter earlier start, with earnings compounded, can mean a difference of thousands of dollars 12 or 13 years hence - when junior's computer, posters, and CDs are piled into the van for freshman orientation.
We hope the one-year trendline from 46 to 55 percent will continue. We suspect it will, because of the intense interest baby boom parents have shown in saving for both tuition and retirement.
At a national policy level, this evidence of growing family education saving should encourage more experimentation with targeted tax-exempt or tax deferred savings accounts. Success of education-specific savings accounts should lead lawmakers in both political parties to take a further look at tax-free health savings accounts as well as Senator Moynihan's plan for a modest private saving supplement to Social Security.
When citizens try saving they like it. Obviously more are doing so.