More than half of American families who plan to send their children to college have not started saving to pay for it and are unaware of new tax-advantaged investment options that make college savings easier, according to a survey by Morgan Stanley.
According to an online/email survey of 1,079 American families, 67 percent of those who plan to send their children to college believe they are not saving enough to pay for it, and 54 percent have not started saving at all.
Three quarters of respondents say they are unaware of "529" college savings plans, enacted by Congress in 1997 to enable flexible and tax-advantaged college savings.
"One of the first issues I touch upon when meeting a client and carrying through the relationship is on the college savings plan for their children,” says a Morgan Stanley rep on the West Coast. “It’s a big part of the portfolio that fits the clients goals and risk tolerance. But it’s true that many people still aren’t aware of the tax-advantaged programs like 529s. It’s up to us to make them aware of it."
Underscoring the need to invest and save as soon as possible, the survey indicates that 70 percent of American families who have started investing and saving for their children's college education did so before their child reached age five. Twenty-one percent started saving when their child was six to ten years old.