Adviser Opportunity: Most Investors Concerned about Rising College Costs but 88% Think College Education Still Worth It

BOSTON, Oct. 6, 2011 /PRNewswire/ --According to new research on American investors, three-quarters report being concerned about the rising costs of college, yet 88 percent still believe that a college education is worth the cost, and nearly 70 percent of those who are parents are finding a way to help pay for it.

Nearly 60 percent of all respondents found 529 college savings plans as among the best ways to save for college. However, only 21 percent of parents/grandparents have a 529 college savings plan to fund their children's/grandchildren's college education.

"This level of awareness of the benefits of 529 college savings plans suggests a significant opportunity for advisers," said Carey Foran Hoch, senior vice president and general manager, John Hancock College Savings. "We are continuing our efforts to help advisors reach out to parents so they can take advantage of those benefits."

The survey was undertaken as part of John Hancock's Investor Sentiment Index, a quarterly measure of investors' views on a range of investment choices, life goals and economic outlook. The Index surveys Americans who participate to some extent in their household's financial decision-making process, and have a household income of at least $75,000, and assets of $100,000.

Parents paying a significant portion of costs

One out of three parents who have helped a child pay for college (32%) report that they paid for all of the costs, and another quarter (26%) say they took on three-fourths or more. Only ten percent of parents who helped a child pay for college say their contributions were under 25 percent.

Investors feel 529 plans are best for college savings

When asked to identify the best ways save for college, respondents most often cited a 529 college savings plan with nearly six in ten investors overall (59%) saying that it is one of the best ways to save for and fund a child's college education. More than four in ten (41%) think setting aside money in a savings account is a good way to save, while just over three in ten (31%) suggest using an investment account earmarked for college to accumulate funds.

Nearly three in ten (29%), however, believe parents should use the money from their general savings and investments to cover college expenses. Just under one in ten (9%) believe that pulling funds from a retirement account is a good way to pay for a child's college costs. Very few think parents should count on money from grandparents (6%) or inheritances (3%) to fund their child's education.

Despite awareness of 529 plans, more parents using general savings and investments

The ranking of college funding vehicles by respondents who are parents and have paid or are paying for college differ from overall investor rankings. Among parents who helped to pay for a child's education, a clear majority – two-thirds (65%) – say they used funds from their general savings and investments to cover the costs. Over two in ten (21%) report using a 529 plan and a similar share (20%) suggest that they used a different type of investment account that they earmarked for college savings. Fewer (17%) used a regular savings account that they earmarked for college savings.

Though investors overall did not want to count on others to help pay, more parents (18%) say that they used gifts from others, like grandparents, to pay for college expenses, while one in ten (10%) used money from inheritances. Over one in twenty (6%) say they used funds from their retirement accounts to help pay for a child's college education.

About the John Hancock Investor Sentiment Survey

John Hancock's Investor Sentiment Survey is a quarterly poll of investors, conducted by independent research firm Mathew Greenwald & Associates.  A total of 1,005 investors were surveyed using an online research panel between August 12 and August 22, 2011.  To qualify, respondents were required to participate to some extent in their household's financial decision-making process, have a household income of at least $75,000, and assets of $100,000.  The data were weighted by age and education to reflect the population of Americans matching the survey's qualification requirements. In a similarly-sized random sample survey, the margin of error would be plus or minus 3.15 percentage points at the 95 percent confidence level.  The John Hancock Investor Sentiment Index is based on consumer assessments of whether this is a good time or bad time to put money into six different types of investments.

About John Hancock Financial and Manulife Financial Corporation

John Hancock Financial is a unit of Manulife Financial Corporation, a leading Canadian-based financial services group serving millions of customers in 21 countries and territories worldwide. Operating as Manulife Financial in Canada and in most of Asia, and primarily as John Hancock in the United States, Manulife Financial Corporation offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. For more than 120 years, clients have looked to Manulife for strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Funds under management by Manulife Financial and its subsidiaries were Cdn$481 billion (US$498 billion) as of June 30, 2011.  Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE, and under '945' on the SEHK. Manulife Financial may be found on the Internet at www.manulife.com. The John Hancock unit, through its insurance companies, comprises one of the largest life insurers in the United States. John Hancock offers a broad range of financial products and services, including life insurance, fixed and variable annuities, fixed products, mutual funds, 401(k) plans, long-term care insurance, college savings, and other forms of business insurance. Additional information about John Hancock may be found at www.johnhancock.com.

SOURCE John Hancock College Savings