More than one-third will delay their retirement to offset costs of private school education
CHICAGO, October 2, 2015 – BMO Private Bank, a part of BMO Financial Group, today released the results of a study profiling affluent American parents’ views on their children’s education. The study is part of a series examining trends among America’s wealthy.
According to the study 97 percent of affluent American parents expect their children to pursue a college education and 23 percent currently have children in college.
The study found that their children’s college costs (including tuition, books, supplies and living expenses) will be covered by:
- Parents’ personal savings (47 percent)
- Child’s own savings (17 percent)
- Money from relatives or a scholarship (11 percent)
When thinking about their children’s time in college, wealthy Americans are more concerned with how their children will fare after graduation than how they will perform academically. The study showed that affluent American parents are most anxious about their children’s ability to:
- Maintain their standard of living after graduation (51 percent)
- Secure a job after finishing school (46 percent)
- Achieve high grades (40 percent)
- Finish their post-secondary education (38 percent)
“While affluent American parents plan to help their children with college expenses, they also expect their children to contribute and help pay for some of the costs,” said Darrel Hackett, President, BMO Private Bank. “Given this, it’s important to teach children about saving and investing from a young age to build their financial literacy and set them on a path towards financial independence and success.”
Mr. Hackett noted that, for those who want their children to become savvier on money matters, BMO offers Financial Fluency- a seminar that caters to the children of clients who are looking to gain general financial knowledge and learn about investment principles in order to develop their personal finances and family wealth. Participants get insight on: how to manage debt and leverage credit, the basics of wealth planning and investing and the use of different asset classes. Mr. Hackett added that BMO currently offers Financial Fluency to its Canadian private banking clients and will be looking to expand the program into the U.S.
Private School: Preparing for the Future
The study also found that 28 percent of affluent American parents have children enrolled in private schools. Among those with children in private school, 92 percent pay for their child’s tuition themselves. Of this group, two thirds (62 percent) say the private school expenses have minimal or no impact on their household finances. However, more than a third (37 percent) stated they most likely will have to delay their retirement to offset the costs of tuition.
Parents who elected to send their children to private school over public school did so because they believe a private education will:
- Set their children up for success when in a post-secondary school (60 percent)
- Offer a better education (54 percent)
- Set their children up for success in their future career (54 percent)
- Create an opportunity for future networking opportunities (46 percent)
“Depending on the needs of the child, private school can be an excellent alternative to public schooling. However, the costs of tuition and other related private education expenses can accumulate,” said Mr. Hackett. “It’s important to start the planning process as early as possible and give some thought into what type of school you’d like your child to attend. A financial professional can then help you create a wealth plan with an education savings component that will help ensure the costs of tuition don’t significantly impact your other financial priorities.”
Survey results cited here are from online interviews with a sample of 493 Americans 18 years of age and older who have at least $1 million in investible assets. Surveys were conducted between October 15 and October 28, 2014.
About BMO Private Bank, a Part of BMO Financial Group
BMO Private Bank offers a comprehensive range of wealth management services that include investment advisory, trust, banking and financial planning to meet the financial needs of high net worth clients. Through integrated teams of experienced financial professionals, BMO Private Bank helps its clients realize their financial and lifestyle goals with solutions that are custom tailored and delivered with the highest level of personalized service.
BMO Private Bank is a brand name used in the United States by BMO Harris Bank N.A. Member FDIC. Not all products and services are available in every state and/or location.