Record Number of Families Saving to Pay For College

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    (CNNMoney) — Families are still losing the college savings race: More are tucking away money, but they’re falling painfully short as tuition continues to climb.

    A record 69 percent of families say they’ve started saving for college, according to a Fidelity survey released Wednesday of more than 2,000 families with children who are 18 years old or younger.

    At the same time, the average family expects it will have to foot the bill for 62 percent of college costs, with the rest coming from other sources like financial aid and loans. Last year, the survey found families expected to have to pay 57 percent of costs.

    With an average savings of $5,000, families are on track to reach only about a third of their savings goal.

    Meanwhile, more parents are opening 529 college savings plans, which are tax-advantaged investment plans designed to encourage families to save for education. About a third of respondents said they are investing in these accounts, up from 28 percent last year and 18 percent in 2008.

    As much as families scramble to save, it’s impossible for many to keep up with the rising cost of college. Public college tuition spiked 8 percent last year, while private tuition increased about 4 percent.

    As a result, more than half of families said they worry that their kids may have to compromise quality for cost when choosing a college.

    And to cut costs, many are considering encouraging their children to attend a public school, live at home and commute, take online classes and even graduate in fewer semesters.

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