Poll: Few Parents Ready to Pay for Kids' College

Feb. 10, 2007 — -- Americans overwhelmingly expect their kids to go to college. Figuring out how to pay for it is another matter.

Nine in 10 parents in this ABC World News Saturday/Sunday poll say it's at least somewhat likely their children will attend a four-year college. But nearly half, 48 percent, also say they're behind where they should be in terms of saving for it. Just 10 percent are ahead.

That's even though few parents plan to foot the whole bill. Just under two in 10 plan to pay all of the cost of their children's college education. About a quarter say they'll pay most of it. But just over half say they'll pay for only some of it, or less than that.

The main alternative to parent-provided funding seems to be hope: More than four in 10 say they're counting on a scholarship or grant. Two in 10 also are figuring on a student loan; as many say their kids will have to help pay from their own savings, and/or to work their way through school. One's counting on the "Tennessee state lottery."

Another option -- the nation's tax-advantaged "529" college savings plans -- suffers from a lack of awareness. Fewer than one in 10 parents has opened a 529 account, mainly because two-thirds haven't even heard of them. Capital gains in these plans aren't taxed, and in some states annual contributions can be deducted from state taxable income.

There's other unsettling news. About a third of parents who've started saving for college have the money mixed in with other savings rather than in a segregated account. That can make it hard to keep the money around for its intended purpose. And 55 percent of college savers have the money in a savings or even a checking account -- hardly the best choice for long-term gains.

Two in 10 are using stock or bond investments outside of 529s, and eight percent are in 529 plans. That leaves 12 percent who say their savings are elsewhere -- including, for one, in "a cookie jar," and for another, in "a box under my bed."