2009-11-10 12:35

OppenheimerFunds Survey: When It Comes to College for Their Kids, Women Drive the Planning Process But Many Take a Back Seat on Finances

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74% of Women Say It's Very Important for Kids to Go to College, But One Third Say Someone Else Directs the Financial Planning

Moms Doing a Great Job Getting Kids to College; Keeping Them There and Out of Debt Is the Challenge

Women Bear the Brunt: Poor Financial Planning Can Put Women's Retirement Security and Kids' Future at Risk

What's Required: Early Household Discussions, Integrated Financial Planning

Women are highly committed to getting their kids to college and drive most households' college preparation - but many are taking a back seat when it comes to college savings, according to the results of a nationwide survey of parents of pre-college age children released today by OppenheimerFunds, Inc. (OFI).

Women are even more committed than men to the value of a college degree. Nearly three quarters - 74% of 1,099 women polled said it's very important for their children to obtain a college degree, compared with 66% of 559 men polled. College is viewed as valuable especially for women; 52% of the women surveyed (vs. just 30% of the men) strongly agreed that a college education is particularly important for a woman's ability to achieve financial security.

Despite the critical importance of a college degree to the women surveyed, in households that have begun planning financially for college, primary responsibility for this critical exercise most often belongs to men.

"Women are passionately committed to college for their kids, and are typically the key force getting kids ready for higher education everything from meeting with teachers, to helping with homework, to helping to identify the right college," said Donna Winn, president and CEO, OFI Private Investments Inc. "But when it comes to the vital task of college financial planning, we found that women frequently turn over the reins. Preparing kids academically for college without planning for how to pay for it is like designing a house with no money to build it.

"The reality is that because most households have not adequately saved for college, our kids frequently head off to college with a backpack full of student loans," Winn said. "Some kids drop out for financial reasons; many others graduate with a debt load that can take decades to eliminate. It's critical for women to recognize that college financial planning is far too urgent a task to be left to chance - or totally left to someone else, even a close partner.

"From a planning perspective, there is plenty that families can do now to better anticipate and help realize their deeply held life hopes - not least, the dream of a college education," Winn said.

Women Paying the Price: Now and Later

College funding is an issue for women in college, after college and for decades after, for both parents and students alike.

"Because women outnumber men on college campuses by a factor of almost three to two, women pay the price - literally and figuratively - for poor college financial planning, frequently dropping out or graduating with debt that can cast a shadow over much of their adult life, affecting even their ability to retire," Winn said. "College debt is particularly problematic for women, as they earn less than men and are more likely to move in and out of the workforce."

Poor college financial planning on behalf of her kids can also impact a mother's own future and financial security, the OFI poll indicates.

According to the OFI poll, nearly two thirds of women believe that paying for their kids' college education will significantly impact their ability to save for their retirement.

About eight of 10 women agree - and about one-third strongly agree - that it's important to plan financially for retirement and college costs at the same time. But the planning reality is far different: Only 10% of women strongly agree that they have such plans in place.

"The implications are clear: To the extent that women don't manage the college saving process well, their retirement could take a hit," Winn said. "It might be because they're paying college costs out of their own retirement funds - or subsidizing a child who 'failed to launch' because of heavy college debt or lack of funds to finish school.

"For the sake of their kids with strong college dreams - as well as their own financial security - women need to match their fervent devotion to the cause of college with much more attention to the financial side of the equation," she said.

Women Strive to Prepare Their Kids for College

Women take the lead in helping direct their kids' educational careers - and getting them ready for college - early on.

According to the OppenheimerFunds poll, women take primary responsibility for many key steps in the long-term educational process, to a much greater degree than men from volunteering in school (95% of women vs. 39% of men), meeting with their child's teachers (88% vs. 43%), and helping their child with homework (83% vs. 55%), to discussing college with their child (83% vs. 64%), helping their child research a college (89% vs. 62%), and helping with the college application process (87% vs. 62%).

Just 52% of women - compared with 70% of men - say their spouse/partner is taking responsibility for helping their child prepare academically for college.

"Women see paying for college as one of their key responsibilities as parents," said Raquel Granahan, OFI senior vice president, college savings plans. "And they really want to give their children a college experience that isn't weighted down with financial worries."

More than half of women agree that not paying for college would be "a failure for me as a parent." Among parents who said attending college was a significant financial burden for them, women are more likely than men - 57% vs. 48% to strongly agree that it's important that attending college be less of a burden on their children than it was for them.

Women also are more likely than men to say they want to pay some college costs so that their children can enjoy the college experience and not have to worry too much about finances, focus on their studies rather than earning money in college, and graduate college with as little debt as possible.

Women are also willing to make personal sacrifices to pay college bills, to a degree that outstrips that of men.

When it comes to taking steps that can help pay for their kids' college education, women are more likely than men to say they're very willing to eat out less (77% vs. 69%), buy fewer consumer electronics (76% vs. 65%), buy fewer clothes/shoes (75% vs. 64%), give up a vacation (66% vs. 59%), take a second job (34% vs. 25%), and take out a personal loan (30% vs. 25%).

"Women are zealous about the cause of college, indeed, willing to make a life-long economic commitment to helping their kids achieve it," Granahan said. "Their passion for higher education is directly fueled by recognition of just how important college is to future economic security - especially for women." Indeed, as of 2006 women under age 65 with a bachelor's degree were earning $53,211 annually, compared with $29,419 for women with a high school education only, according to the U.S. Census Bureau.

Many Women Lack Involvement in College Financial Planning

But for many women, appreciation of college's economic value and a strong willingness to cover the costs hasn't necessarily translated into focus on the financial side of the college planning process. "In fact, many women have given over this responsibility to others, their spouses in particular, and many are just not knowledgeable about their own household's college saving picture," Granahan said.

For example, women are less likely than men to know how much their household has saved for college (56% vs. 65%) and also less likely to have a goal for college savings (40% vs. 46%). Among those with a savings goal, women are also less likely to have factored the cost of extra college expenses - a variable that can readily upset a careful college financial strategy - into their goal (67% vs. 75%).

"Women can put a lot at risk if they're not very heavily involved in the college financial planning process," Granahan said. "First of all, they risk not achieving one of their most cherished dreams for their children: a college diploma and a strong 'launching pad' for adult life.

"But women also can risk their financial future if - to close a college savings gap they curtail their retirement savings, dip into a retirement fund, or take on personal indebtedness to cover college costs.

"It's ironic that women - who generally care more than men do about college - also often bear a considerably greater risk than men from failure to help direct college financial planning," she said.

Poor College Savings Can Worsen Women's Financial Challenges

Both women and men are feeling challenged by the economic downturn, though women are somewhat likelier than men to say the economic downturn has made them more concerned about their ability to save for college (80% of women vs. 73% of men) and their own financial vulnerability (86% vs. 79%).

"What really sets women apart are the special circumstances that challenge women throughout their lifetimes, and later in life in particular - circumstances that can have a huge impact on their longer term financial security," Granahan said.

Women say - to a greater degree than men - that women's long term financial security is affected to a major degree by leaving the workforce to have children (64% vs. 48%), gender discrimination in the workforce (44% vs. 28%), and living longer than men (34% vs. 28%).

Women are also more likely than men to strongly agree that given the high divorce rate in this country, women can't count on husbands to support them (52% vs. 28%) and that it's more important than ever before for women to be self-sufficient (62% vs. 34%).

"Men tend not to see these factors as big considerations in women's lives," Granahan said. "But they loom large for many women, and they represent compelling additional reasons for women to manage their financial lives including the college planning exercise extremely well."

Many Single Women Put Kids' College Ahead of Their Own Retirement

Single mothers face their own extraordinary challenges, with both college and retirement, according to the OFI poll. More than 40% of single mothers say that compared with married mothers, it is less likely that their kids will go to college.

And, while a little more than half of single mothers say they are equally concerned with their own retirement and getting their kids to college, about one third say they aremore concerned with getting their kids to college.

For these mothers, it's truly all about putting their kids first: Their most important reasons for valuing their children's education over their own retirement are "I value my own kids' happiness over my own" (84%); "I am used to getting by on less and can manage to do so in retirement" (75%); "I need to worry about college now and will think about retirement later" (71%).

Women Know They Need to Do Better

Women are painfully aware that they could do better at financial planning for college costs. When asked to grade themselves on theiroverall college planning efforts, a little over half of women give themselves an A or B grade. However, just 36% of women grade themselves that well for their collegesavings efforts. In fact, nearly six of 10 give themselves a C or worse on this task.

"It's absolutely essential for women to take ownership of the college financial planning challenge, by forcing an ongoing and shared household discussion around college's financial realities and how they'll be met," Winn said. "Women - and especially women planning on their own - need to know too that there are lots of external resources that can help jump-start the financial planning process.

"In particular, a professional financial advisor can be invaluable in developing a smart, integrated approach for reaching both college and retirement goals," she said.

OppenheimerFunds sponsors an educational Website,collegewithinreach.com, that offers information, guidance and tools for all aspects of the college planning process, including development of a financial plan. Information specifically geared toward the college financial planning goals of women can be found atcollegewithinreach.com/moms.

"There is no shortage of good reasons for women to save smartly for their kids, for themselves - and to do both at the same time," Winn said. "Women owe it to their families and themselves to take this challenge on, and manage it well."

About the Survey:

The OppenheimerFunds poll was conducted online between September 25 and 29, 2009 by the national polling firm Mathew Greenwald & Associates. To qualify for the study, respondents had to be parents of a child age 18 or younger who is not currently attending college.

A participants' sample from e-Rewards Online Consumer Panel was used to target this population. We choose to work with this panel because all participants are randomly invited to join the panel, rather than being allowed to "opt in," an approach employed by other panels. Also, this panel achieves among the highest response rates and exercises careful panel management. E-Rewards is one of the industry's most comprehensive and deeply profiled online survey panels.

A similarly-sized random sample of 1,725 respondents would have a margin of error at the 95% confidence level of plus or minus 2.4 percentage points.

Sixty seven parents in the national sample indicated that no one was responsible for planning for their children's college education; these parents did not respond to the poll's specific questions about college planning behavior and savings levels.

About Oppenheimer Funds, Inc.:

OppenheimerFunds, Inc. (OFI) is one of the nation's largest and most respected asset management companies.

OFI has been helping investors pursue their financial goals since 1960. OFI and its affiliates offer a broad range of products and services to individuals, corporations and institutions, including mutual funds, separately managed accounts, investment management for institutions, qualified retirement plans and sub-advisory investment-management services.

OppenheimerFunds is widely recognized as a leader in educating and empowering investors and for its award-winning customer service.

About OFI Private Investments Inc.:

OFI Private Investments Inc. (OFIPI), a subsidiary of OppenheimerFunds, Inc., helps individuals, institutions and nonprofit organizations work toward their financial goals by offering a diverse range of tailored investment products and services, including investment management services for 529 college savings and prepaid plans. Currently, OFIPI is the program manager for college savings plans offered in Illinois, Nebraska, New Mexico and Texas.

Backed by the distribution strength of its parent company OppenheimerFunds, Inc., a recognized and trusted partner in the financial services industry, OFIPI draws on the experienced investment teams of OppenheimerFunds, OFI Institutional Asset Management and other affiliates within the Mass Mutual organization to help clients meet their long-term investment needs.

About "Keeping College Within Reach" (KCWR):

KCWR is an OFI-sponsored communications program with the goal of advocacy for effective saving and investing for college. KCWR seeks to:

Investments in 529 college savings plans are neither FDIC insured nor guaranteed and may lose value. Please note the plan's disclosure document includes details such as investment objectives, risks, charges and expenses, and other information that investors should read and consider carefully before investing.

Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including the possible loss of the principal amount invested. Before investing in any of the Oppenheimer funds, investors should carefully consider a fund's investment objectives, risks, charges and expenses. Fund prospectuses and, if available, summary prospectuses contain this and other information about the funds. You may download and view a prospectus now, or to obtain one, ask your financial advisor or call OppenheimerFunds Distributor, Inc. at 1.800.525.7048. Read prospectuses and, if available, summary prospectuses carefully before investing.

Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc. Two World Financial Center, 225 Liberty Street, New York, NY 10281-1008

SOURCE OppenheimerFunds, Inc.

 


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