College is expensive. College is so expensive that the mere thought of paying for their children’s college tuition
has led some parents to encourage their children to change majors. The sixth annual College Savings Indicator study, conducted by Fidelity Investments, revealed that a full 16 percent of parents have asked their children to change majors so that their future college graduate will have a better chance of earning a higher salary upon graduation.
A higher post-graduation salary is important because these college students are going to end up paying, on average, more than 40 percent of their college expenses. Parents surveyed during the sixth annual study plan to pay for about 57 percent of their children’s college costs.
While 57 sounds like a pretty decent contribution, the typical family is only on track to pay about 30 percent of the total cost of college. This means that many future college students are going to have to pay the lion’s share of their tuition and fees. This sad reality is why some parents or placing more emphasis on the need to choose a college major that is associated with a higher paying job.
Degree programs that parents want their children to choose include the fields of computer science, nursing, engineering, psychology, biology and accounting. Parents who encouraged a specific major report an expected annual salary of $70,300 upon graduation.
“With college costs increasing an average of 5 percent every year , saving enough for a child’s education will continue to be a challenge for many families,” said Keith Bernhardt, vice president of college planning at Fidelity Investments. “More than ever, it’s critically important for families to review their college goals and savings strategies early and make adjustments to avoid burdens brought on by large amounts of post-graduation debt.” Source: Fidelity Investments
Other findings from the sixth annual College Savings Indicator study include:
61 percent of families are making changes to their college savings plan to better manage post-graduation student debt
38 percent of families are choosing a lower-cost college
33 percent of families are using a financial advisor to manage college savings
28 percent of families are planning to rely on financial aid more heavily than originally expected
If you’re a parent, how do your college savings plans stack up to the results from this year’s study?