Sky-high inflation and soaring college costs have left a growing number of American families behind in saving for their children's education despite the pandemic-era student loan relief, according to new data.
A study released Tuesday from Fidelity Investments and viewed by FOX Business indicates U.S. parents are losing ground in their quest to save for college, with only 27% of parents surveyed on track to cover anticipated costs of their kids' educations, a decline from recent years.
"The study finds that while parents are less concerned with COVID-19’s impact on their savings strategy, there’s a new wave of concern keeping them up at night — inflation and market volatility," said Rita Assaf, Fidelity's vice president for retirement and college.
Eighty-one percent of respondents said they are worried about the recent market volatility's impact on their college savings, up from 74% in 2020. Many are struggling to save at all, with nearly one-third telling researchers they are still paying off their own student loan debt and have not started saving for their kids' educations.
The report shows college is parents’ primary savings priority and that they are continuously increasing the amount they plan to contribute as college costs continue to rise, but many are still falling short.
Fidelity said the ongoing federal pause on student loan payments since the early days of COVID-19 has provided some relief to parents, with 49% reporting that they are not making any payments toward existing loans.
President Biden announced last month that the student loan pause will lift at the end of the year, and he took executive action to forgive anywhere from $10,000 to $20,000 of student loan debt for current eligible borrowers for additional relief.
But future borrowers will not receive that break, and some experts say the president's handout will only cause the cost of higher education to soar further — making it even more difficult to save enough for higher education.
The cost of college has already surged by multiple times the rate of inflation over the last five decades.
Using data from the nonprofit College Board last year, an analysis by My eLearning World found that the average cost of going to a private college — including tuition, fees, books, and room and board — went from $2,930 per year in 1971 to $51,690 in 2021. That is an increase of roughly 4.6 times the rate of inflation.
The price tag for public college has surged, too, going from $1,410 annually in the early 1970s to $22,690 for in-state students and $39,510 for out-of-state students as of last fall.