Oregonians strongly favor investing in higher education for their children and grandchildren, revealed a new College Confidence Survey. In fact, 79 percent of Oregonians surveyed in Clatsop, Columbia, Coos, Curry, Lincoln and Tillamook Counties believe saving for college is important, ranking it among four priorities, along with retirement, basic living expenses and long-term health care.
The survey indicated that when saving for college, Oregonians in these counties currently utilize – or plan to use – a mix of bank savings accounts; mutual funds, stocks and bonds; financial aid and scholarships; family contributions; and the Oregon College Savings Plan, the state-sponsored 529 college savings plan. Among those already saving for college, the Oregon College Savings Plan was named as the single best way to do it.
"We were pleased to learn that Oregonians are committed to saving for their children's future and are using sound strategies to help reach their college savings goals," said Michael Parker, Executive Director of the Oregon 529 College Savings Network, which sponsored the study. "At the same time, many respondents were unsure where or how to begin saving, so we have some educating to do."
In the College Confidence Survey, conducted by Portland firm Riley Research Associates, respondents were more likely to indicate they were saving for college if they were 54 years old and younger, did not have a college degree, owned a home, and lived in an urban or suburban setting with an annual household income of less than $75,000.
The top reasons why the Oregon College Savings Plan was cited as one of the best options (compared to the other financial vehicles cited above) included tax advantages and benefits, ease of use and investment return potential. Half the respondents who cited the Oregon College Savings Plan as the best option stated that the tax advantages/benefits was their primary reason for saving.
But not everyone is saving for college, and two barriers were most commonly cited, including not having enough money and saving for other priorities. Income played a role, with households making less than $100,000 a year more likely than others to cite the leading obstacles.
Those results didn't surprise Parker, but allowed him to emphasize one of the Oregon College Savings Plan's key messages. "For young people, debt levels are triple the national average," explained Parker. "We want families to understand that the cost of saving for college is lower than the cost of paying off future student loan debt."
According to the College Savings Foundation, to accumulate $10,000 over 10 years at seven percent interest, a family needs to save $58 per month. But to repay $10,000 over 10 years at seven percent, that same family would need to pay $116 per month, making the true cost of borrowing $6,960.
College remains a wise investment. According to the U.S. Census Bureau (Current Population Survey, 2011 Annual Social and Economic Supplement), a person with a bachelor's degree or higher can earn 79 percent more on average than someone with a high school diploma. Over a lifetime, the difference in earning potential can be more than $1 million.
This was the first year of the College Confidence Survey, which took place between December 2012 and January 2013. Qualified respondents lived in Oregon, had an annual household income of $25,000 or more, and had a child or grandchild 18 years of age or younger. The sample of respondents produced a margin of error of +/-4.4% at a 95 percent level of confidence.