Parents saving less for kids' college education

Chicago Tribune (MCT) - Erin Stawarz can easily call her parents to baby-sit or suggest toys for Christmas, but one topic remains taboo: asking them to help pay for their grandchildren's college tuition.

"They're saving for their retirement and are assisting in caring for my mom's mom," said Stawarz, 32, of Cary, Ill., who has three young children. "I don't think it would be right" to ask for help.

A tough call to make, perhaps, but it might be a good idea to consider, according to a report on soaring tuition costs.

Parents are saving less for their children's college education this year than last year, and more people have saved nothing at all, according to the survey by the Washington-based College Savings Foundation.

Estimating that tuition and board will increase 5 percent annually, the projected cost of college in 15 years will be more than $100,000 for a four-year public college and more than $200,000 for a private college, according to the survey.

The nonprofit foundation has suggested some potential solutions for parents faced with the shock-and-awe of such crushing numbers. Near the top of the list is asking grandparents to help their grandchildren by trading toys for tuition help or starting college savings plans for them.

Sixty-five percent of surveyed grandparents say they plan to contribute financially to their grandchildren's college education, but parents apparently are not tapping this valuable resource, said Kevin McMullen, chairman of the foundation.

"I guess my theory would be that asking grandparents for money in general is tough for some people to do," McMullen said. "The message should be focused more on what these kids will be facing _ decades in debt, possibly a lack of federal aid. Combining grandparents and parents together sends the right message, that it's a family problem."

It's a message Jane and Bob Koehler of Woodstock, Ill., understand. They started a college savings plan for their 5-year-old granddaughter and plan on doing the same for their grandson and another grandchild expected next month.

The costs of raising a family today is breathtaking, said Jane Koehler, who recalled filling up her car's gas tank in college for $3. She said her parents helped pay for her children's college tuition, setting a family precedent.

"Both my husband and I are former educators, so we really value education and definitely want it to be a part of our grandchildren's lives," she said. "The economy is different from when we went to school and when our children went to school. I'm a librarian now, so I don't make a huge salary, but I'm committed to helping."

"The State of College Savings" is the second survey conducted by the foundation, which is dedicated to helping families save for their education savings goals. The foundation, which includes representatives from the financial sector and colleges, surveyed parents across geographic, age and income brackets.

This year was bleaker than last year for college savings, according to the report, which surveyed 800 parents. Forty-three percent of those who responded said they have saved nothing at all, compared with 27 percent last year.

The participants made it clear that asking grandparents or other close relatives for financial assistance for college was not an idea they seriously entertained.

Asked whether they would ask friends or family to contribute toward college instead of sending gifts for birthdays or Christmas, 65 percent said "no."

Only 22 percent said grandparents are helping to pay for college.

Debbie Gibbs of Hainesville, Ill., has four children, one a freshman at the University of Illinois at Urbana-Champaign. Her son's high ACT scores netted him a tuition waiver from the military, because his dad is retired from the U.S. Navy.

But fairly soon, the family will have a senior and freshman in college.

Her parents are deceased and her husband's parents probably would be willing to help, but Gibbs said they hesitate to ask.

"My husband doesn't handle those conversations well," she said. "I honestly believe they would have helped; they have the resources. But it's just a pride thing on my part."

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Luckily, Erin Stawarz did not need to have that conversation. Last Christmas, her parents opened a 529 state college savings plan for the two oldest boys, ages 5 and 3. They make small contributions when they can.

Stawarz's father, Ron Waltz, said that when his daughter entered the U. of I. in 1994, annual costs were roughly $9,800. When the second daughter started at the University of Iowa, he paid $13,000. During her senior year, the price tag soared to $20,000.

"I can only imagine the task of educating kids 15 years from now," he said. "There are big challenges out there in the future for these kids."

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© 2008, Chicago Tribune.