We at OppenheimerFunds Inc. recently surveyed some 1,000 American parents of pre-college-age children to get their thoughts on the importance of college. We also wanted to learn more about how parents are saving for college and how to best support their efforts.
Nine of 10 parents told us that, despite the toughest economic climate in decades, they still view sending their kids to college as an essential part of the American dream—as important as having a comfortable retirement or owning their home. Most parents said they hadn’t put saving for college on hold, reduced their savings, or withdrawn funds from college-savings plans. The belief that a college degree is valuable seems to have grown over time: Almost eight in 10 Americans agreed that it’s very important to obtain a degree, while only a little more than half said their parents had felt it was very important for them to attend college.
We were particularly interested in the perspective of Hispanic-American parents, given that their children will be the majority of the school-age population by midcentury. As many as 95 percent said sending their kids to college was essential. Nearly three-quarters agreed that college was within reach for everyone who wanted to go, a belief more strongly held by Hispanic than non-Hispanic parents.
But more than half of the parents said college was not as accessible as it once was. And nearly two-thirds said that if tuition kept skyrocketing, college would become unaffordable for most families. Meanwhile, the numbers described a hard reality: More than six of 10 had saved less than $10,000 for college, and about four of 10 had saved less than $5,000. Twelve percent had saved nothing. For Hispanic parents, the savings picture was even more troubling: More than half had saved less than $5,000, and one-quarter had saved less than $1,000. Yet nearly eight of 10 parents said they wanted to cover half or more of their kids’ college expenses—and about one in four said they wanted to cover it all.
How do they plan to make up the difference? More than half thought that scholarship money would pay for a big part of the tuition. Most didn’t envision borrowing much. About half wanted their kids to take on less than $10,000 in debt—even though the College Board estimates that the average education debt of 2008 bachelor’s-degree recipients who graduated with debt was $20,000.
Clearly there’s a growing divide between the deeply held dream of college and the ability to pay for it—a national tragedy in the making. All of us who care about building a well-educated citizenry—government officials, policy makers, leaders of institutions and organizations—must take practical steps to sustain Americans’ college hopes. My own industry, financial services, must do much more to communicate the college-savings challenge and show effective savings strategies to parents. We’ve been far too focused on products and not nearly enough on the circumstances and context in which those products are used.
We are in a distinct position to educate parents—and the financial professionals who advise them—about lower-cost college options and important, noninvestment tactics for managing educational costs, including the many collateral expenses that are often just as burdensome as tuition bills.
No question, the dream of college is alive and well. But what we found amounts to an urgent call to action for everyone concerned about accessible and affordable higher education.
