Sallie Mae has just published their 2018 report on How America Saves for College. It reveals some interesting trends.

People are Saving More

Almost 6 in 10 parents are saving for college (56 percent). That’s up from 48 percent in 2015. And the average amount saved for college is $18,135 — up 11 percent since 2016. The most common reason parents are saving more? Because their household income has gone up (39 percent). Good deal! Other reasons for saving more include: Evaluated savings and realized a need to save more (27 percent), learned about the cost of college (21 percent), and reduced expenses (20 percent).

What about the 44 percent of us who are non-savers? The most common reason people give for not saving is that they don’t earn enough (52 percent). Other reasons given are that financial aid should take care of it (27 percent), college won’t be too expensive (12 percent), or it’s the kid’s job to pay (11 percent).

How About the Kids Help Pay?

Speaking of the kids … parents these days are expecting more. In 2016, 51 percent of parents said that paying for college should be a shared responsibility between the parent and the child. By 2018, that figure jumped to 59 percent. In 2016, 60 percent of parents said they would not tap their retirement account to pay for their kids’ college. In 2018, that figure is up to 69 percent.

Are the kids on board with this? Well, among parents with teenagers (13-18) who believe their child should have some responsibility for paying their own college costs, about 63 percent have discussed this communicated this expectation.

Here’s why this matters: If you want to minimize the cost of college (and 77 percent of parents say they do), you have to talk to your kid. Because the kid’s choices will drive the cost of college: Two year school first, or straight to a four year college? Public or private? Live at home or on campus with a meal plan? On a path to graduate in four years, or more? Choice of major and future line of work? That last one tends to determine earnings — the industry more than the major, and the major more than the college.

Frugality is on the Rise

A friend of mine who spent 15 years as a Vice-President in a traditional Christian liberal arts college noted to me that over 2/3 of his undergraduate students lived and ate on campus when he started. Today, less than half do. The primary reason? More students are choosing to live rent-free with a parent or relative.

The Sallie Mae report found that parents have adjusted down their college savings goal since 2016. This may seem weird, because as I said earlier, parents have saved more. In 2018, parents have set aside $18,135, and hope to have $55,342 when their kid goes to college. So they’re about a third of the way there. In 2016, they had only saved $16,830 — but they aspired to have $61,902. They were only one-fourth of their way.

Parents have done more but expect less of themselves. This is consistent with more parents expecting that their kids help pay.

But Are We Saving Enough?

Right now, that $18,135 figure parents have saved would cover about 1 year at an in-state, four-year, public university (about $20,000). Roughly half of that is tuition and fees, the other half is room and board. Which means the most effective way to lower the bill is to live and eat at home. This is also true at private universities, even though at private schools room and board is a smaller percentage of the overall price tag.

Critics will observe that commuter students academically underperform residential students. In aggregate, this is true. Residential students are more likely to access faculty office hours, find study groups, receive peer-to-peer tutoring, and attend review sessions. They’re less likely to have non-academic demands on their time. I’ve had commuter students miss many class periods because their parents require them to help with siblings. You’re saving money, but if your kid gets much lower grades or (worse) fails a class or two, you’re robbing Peter to pay Paul. That said, when commuter students have a positive study environment in their home, and when they’re not overworked, they do just fine.

So how much should you save? There are various rules of thumb out there, and families have widely different financial means. But here’s my take: You want your kid to graduate with marketable skills, a well-trained mind, and no more debt than about half their first year salary. To play it safe, say $20,000 — about the cost of 1 year of college. It’s reasonable to expect your child to earn at least that much while attending school. That’s $5,000 per year. Frankly, they can earn more if they leverage their skills — tutoring, teaching piano, maintaining swimming pools — or if they’re willing to work 50 hour weeks in the summer.

If the kid covers one year of college, and borrows for no more than one year of college (ideally less!), then parents (and relatives) just need to come up with the other 50 percent (assuming a four year graduation — which is super important!). A good college saving calculator takes into account the growth rate of the cost of college, the growth rate of your savings, and the fact that scholarships and grants are often related to your household income. Plug in your numbers and you’ll see it’s doable.

Dr. Alex Chediak (Ph.D., U.C. Berkeley) is a professor and the author of Thriving at College (Tyndale House, 2011), a roadmap for how students can best navigate the challenges of their college years. He’s also the author of Preparing Your Teens for College. Learn more about him at www.alexchediak.com or follow him on Twitter (@chediak).