Millennials are saving for kids’ college

The Fidelity study found that saving for their kids college is the No. 1 priority among millennials – far below retirement (No. 4) – which is often a big no-no, financial advisors say – that is, unless you’re fully on track to save for retirement (which most aren’t). A surprising 43 percent say they’re aiming to pay the full price for their children.

That figure is up from 64 percent previous year and 58 percent when Fidelity first conducted a college savings study in 2007.

Among all parents surveyed, 62% were saving strategically by developing financial plans, up from 59% in last year’s study, and 39% were using tax-advantaged 529 college savings plans, up from 32% in 2014. Survey respondents had household incomes of $30,000 a year or more, and were the financial decision makers in their household. Among parents born between 1981 and 1997, 85 percent of those surveyed had attended college and 61 percent had college degrees.

“Millennials have weathered challenging economic conditions for much of their adulthood”, Bernhardt said. “More than any other generation, millennials have experienced first-hand the balancing act of paying off student loans while striving to become financially independent, which has likely propelled many of them, as parents, to take action”, the Fidelity report revealed.

The higher rates of education may explain why these parents are so gung-ho about helping their kids pay for college: these parents understand the benefit. An earlier Pew study found that 86 percent of college graduates felt their own education was a good investment, even as the majority of Americans (57 percent) said the higher education system fails to provide good value for the cost. “It is critical that parents of all ages establish college savings goals that are practical for their family’s individual circumstances and get the guidance they need to ensure they have an effective savings strategy to help them achieve those goals”.

What’s more, this focus on college savings may be a mistake for many.