October 18, 2006
This financial study may have parents with college bound children rethinking how much money they'll need to save.
Having your child attend college is a goal many parents share, but a new study by Alliance-Bernstein Investments shows parents are overestimating the amount of available financial aid.
Bruce Crook, a parent, said, "We realized that it was going to take a lot more money than just the grant money available; the cost of a child traveling, food, all types of books."
The college board says on average parents have $12,000 saved when their child reaches college age, but that amount would fall short of the estimated $29,000 required for one year at a private institution.
Doug Tanner a financial aid advisor, said, "Only about 25 to 30 percent of our children receive any grant funds and the amount of scholarship funds is less than that."
It’s a reality check for many parents.
"If you're not prepared it's kind of tough."
"Unfortunately, it's the vast minority that receives any grant or scholarship funds."
Financial aid advisors say that 92 percent of parents overestimate the amount of scholarship money their children will receive, forcing a lot of those parents and students to turn to loans. To avoid loans, and depending on grants, many parents choose to save.
Crook said, "We had accounts saved up for the children. We've done that for over 14 years."
Financial advisors say it's never too early to set up a college fund.
Crook added, "One, we even started before the child was born."
Financial aid advisors say that parents and students can be convinced by advertising campaigns that there are funds available and unclaimed when they're really not.
Most of those funds that go unclaimed are loan funds. We know that parents should not rely on these scholarships, but the hope scholarship and the Bright Futures Scholarships do promise a lot.
Many parents say they depend on the Hope or Bright Futures Scholarships, which many of their children did get, but local counselors say stricter criteria is making those scholarships harder to keep once the student enters college.