Parents won't meet college costs, study says

As the ticket price for a college education continues to soar, parents are advised to begin saving early for their children's days on campus. But many parents have not heeded this warning, according to a recent study commissioned by Neuberger & Berman, a New York-based investment firm that has launched a sweepstakes in conjunction with the release of the study's results. According to the study, which surveyed 1,000 parents with children under age 13, 31.2 percent have not begun to save for their children's education. The study also discussed methods of saving, reporting that simply starting a savings account will probably not pay for a college education. "Many of those who have begun savings/investment programs are neither putting enough aside nor using the most effective long-term investment strategies," reads the report of the study's results. To encourage parents to save wisely for their children's education, Neuberger & Berman has launched a sweepstakes on the World Wide Web in which parents can win a no-load mutual fund account to help fund their children's education costs. To enter the contest -- which runs through November 30 -- the parent must fill out a college planning worksheet and entry form at the firm's site at "http://www.nbfunds.com". The firm will draw three winners in mid-December, depositing $100 per month for 12 months into an account of each winner's choice. "We have a commitment to helping parent's with their children's education," said Andrea Trachtenberg, marketing director for Neuberger & Berman. Trachtenberg added that the winners will probably receive more than $1,200 if the funds perform well. "Past performance is no guarantee of future results, but we hope that will happen," she said. "Over the long run that has usually been the case." With a college degree increasingly becoming necessary to compete in the workforce, parents are taking it for granted that their children will go to college. According to the study, about 95 percent of the parents surveyed expect their child to attend college, even though 35 percent of those parents did not attend college themselves. Despite these goals, the study revealed that many parents will not be in a position to fund their children's higher education. "College is no longer a hope, but an expectation for our nation's parents," the study reads. "Matching those high hopes to the cold realities of college costs is a problem most people have barely confronted and some continue to ignore." Of those parents who have begun to set aside money, most rely on savings accounts and bonds -- the two least profitable investment options. Only one third have invested in mutual funds, while less than a fifth hold stocks, the study showed. As a result, the amount of money parents are saving is going to fall far short of the cost of their children's education. According to the study, those parents who are setting aside money are saving an average of $76.28 per month per child. Based on the Neuberger & Berman study and figures from the College Board, parents of the class of 2010 should be saving $360 per month per child for public colleges and $767 per month per child for private colleges. Penn Student Financial Aid Director William Schilling noted that saving early will alleviate some of the future economic burden of a college education. "While we don't really deal with parents with young children, our advice would be to start saving as early as possible because it will make things easier when it comes time for college," Schilling said. "The more they save, the less they'll need to consider loans -- either parent or student loans." But the study indicates that parents who are saving do not even know how much they should be putting away. Nearly 40 percent of parents could not guess how much their children's education would cost. Of those who did venture an estimate, most fell far short of predicted costs. The study revealed that 56 percent of those who are saving now said they expected that an education for the Class of 2010 would cost between $40,000 and $60,000 -- about the current cost of a college education. "By the time the Class of 2010 is ready to enroll, the cost of four years at a public college will be about $87,000 and private college will cost about $185,000," the study reported. Schilling said that while the University will continue to "maintain a robust program of financial aid," parents should not expect an increase in aid from the federal government. "There's going to be continuing pressure in Washington to keep the budget down," Schilling said. "That's going to make things more difficult for colleges and students. I don't think we can expect a significant increase in federal support." Trachtenberg also said the higher education economic situation probably will not improve anytime soon, adding that if parents do not save early for their children's education, a college degree may be economically out of reach.