Less Parents Save for their Kids' College Education

College savings plan assets estimated at $85.9 billion for 2009 first quarter was down from $108.7 billion last year. This 21% drop is according to new data developed by Financial Research Corp. and released by College Savings Foundation (CSF).

Reports say that these numbers are getting worse. New dollars invested or gross sales in 529 accounts fell from $2 billion to $1.25 billion from first quarter of 2008 to first quarter this year. This 37% drop was not a surprise for CSF Chairman, Kevin McMullen. In a telephone interview, he says this is expected due to “trying times and market conditions.”

CSF is a good way to measure the amount that people put in the plans because their members represent 39% of 529 savings plan market. These are college plans that encourage savings because they’re not taxed by federal government.

However, McMullen says that these quarter-to-quarter figures are still positive signs because they really don’t show such a big drop. This led CSF to believe that there will be more parents saving in 529s. “Parents still think that their kids’ college education is important,” said McMullen.

The results of Country Financial recent survey revealed their data for the past three years, and for the first time, parents today perceive their children’s education more important compared to their retirement. “Even in difficult times, the goal of parents is still to bring their kids to college,” McMullen concluded.