<p>"According to Sallie Mae’s annual 'How America Saves for College' report, the average family now has a total of $115,604 saved in various forms. But while 51% of these families are saving for college, only 10% of their savings are going toward their kids’ education." …</p>
<p>When a Gen-X parent considers that nothing will be left for them after the Baby Boomers exhaust Social Security, and that saving for college is punished with less in financial aid grants, then it is rational for them not to favor saving for college. </p>
<p>Maybe because of the late hour, I am not able to read clearly Table 9-a in the Sallie Mae report (the basis for the claim that the average family saves $115k a year.) I am finding the math questionable, or at least the way the numbers are presented. In fact, most of the charts’ numbers look strange to me. Do others find that report and the data tables reliable?</p>
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<p>Forget about 51% of families setting up college funds, what about only 55% setting up retirement funds? That’s the scary number…</p>
<p>@chesterton </p>
<p>Table 9-a is tricky. It’s showing averages of those that Do save for each category (not the average of all respondents), and then sums up a group of averages for a total “Average Total of Savings”. .</p>
<p>For example, lets focus on “College for my child/children”</p>
<p>For those that save for college, you have 100% (of course, since we’re selecting based on this criteria) that have an average amount saved of $12,045. We had 1029 respondents.</p>
<p>For those that have nothing saved, it’s 0% (we’re selecting based on this criteria) that have an average amount saved of $0. We had 990 respondents.</p>
<p>Now we combine the two for total respondents (2,019 respondents), we have 51% (1029 out of 2019 respondents) with an average amount saved of $12,045. Note that those not saving (49%) do NOT lower the average amount saved. This number reflects the savings based on those that DO save, the 51%. </p>
<p>This is the reason why the total average amount saved, for all 2019 respondents is higher than you would think, when comparing it to those that saved for college and those that do not. In fact, I would say that the “Average Total Savings” value in this chart isn’t a valid value. A better value would be the total amount saved for all 2029 respondents, which is much less than the “Average Total Savings” in this chart.</p>
<p>That’s the problem with summing averages…</p>
<p>My faith in Sallie Mae continues to drop…I didn’t think that was possible…</p>
<p>In our state, colleges have managed to freeze tuition for several years for instate students.
I agree that the scarier number is the lack of retirement savings.</p>
<p>@Gator88NE… thanks so much. I appreciate your analysis. I thought the numbers looked funny, but being 2 in the morning, I just could not get the math side of my brain to work and tell me why - I’ll blame the hour and not my aging brain :)</p>