DES MOINES — Parents remain determined to save money for college even in the tough economy, but they’re not always choosing the methods that give them the best bang for their buck. The nation’s leading college lender Sallie Mae released Tuesday its second annual study of college students and parents conducted by Gallup. It shows 60% of parents have saved money for their child’s college education, about the same as a year ago. However, it is surprising that nearly a quarter of all college savings has been set aside in retirement accounts including 401(k)s or individual retirement accounts, said Sarah Ducich, senior vice president for public policy at Sallie Mae. The typical family saving for college has amassed an average of $28,102 and is projected to have saved $48,367 by the time their child reaches age 18. DEBT: Student loan debt exceeds credit card debt in USA YOUR MONEY: Student loan program changes affect rates, repayment The problem with relying on retirement accounts is that when money is withdrawn before age 59 1/2, the accountholder must pay taxes on the funds as well as a 10% penalty. As an alternative, some families are choosing to take out a loan against a 401(k) account. This is also problematic because it removes a portion of the retirement fund, reducing the potential for growth. Also there’s the possibility that the loan will need to be repaid quickly if the accountholder changes jobs. Whether an outright withdrawal or a loan, either way, parents are shortchanging their retirement savings potential, Ducich said. An additional disadvantage to using the 401(k) for college savings is that the money withdrawn this year counts as income for the parents. This means that when the family applies for financial aid the next year, that amount will be included in income, reducing potential aid. Of course not all savings is held in retirement accounts. About 21% of money set aside for college is in investments and 14% sits in general savings accounts, which return very little interest. About 12% is held in dedicated college savings 529 accounts. A few responses in the 2010 study show signs that economic pressures have affected how families are setting their savings goals. About 72% of parents say they expect to pay half or more of their child’s education costs, but that is down from 79% a year ago. Also, fewer parents intend to pay most of the cost with 27% saying that this year, compared with 33% in 2009. That’s one more indicator that the recession has forced people to make decisions about their money, said Bill Diggins, a senior consultant at Gallup Inc., who helped conduct this year’s survey. Economic confidence has dropped over the last couple of years and discretionary spending has gone down and continues to fall. Savings rates however, have increased. Diggins said Gallup research indicates about two-thirds of those who are saving more say it’s a permanent change. “We’re finding people will pay for and sacrifice for things they value,” Diggins said. “It’s clear from these studies that they continue to place a high priority on college for their kids.” The study illustrates that point with 21% of parents saying college savings is their most important savings goal, up from 14% in 2009. Saving for retirement fell to 22% as the most important savings priority from 27%. About 38% of families said they are saving the same this year as last year and 34% said they are saving less. About 28% boosted their savings. The study also shows that families understand the need to start early. The average age when parents began a college account is about 3 years old. It’s important now to educate parents on the most efficient ways to save, Ducich said. The dedication to help children obtain a college education is there, it’s now a matter of helping families put that savings to work balancing earning potential with safe investments that help them reach their goals. Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

PHOENIX — A promise kept is a precious gift. And then it becomes a responsibility. That transformation is happening this week at Grand Canyon University here for 15 incoming freshmen. They are at the school because 10 years ago a promise was made to them. VIDEO SERIES: Arizona Republic shows lives changed At the time, they were third-graders at Granada Elementary School in west Phoenix. Many were poor, and most of their families probably didn’t consider college an option. When university officials brought them and their parents together to promise the students that they could go to the college for free, none of them really understood what it meant. Now, it is the students’ time to fulfill that promise. A teacher gunned down “Sydney’s Kids” were named after Sydney Browning, a Phoenix native and a Grand Canyon graduate. On Sept. 15, 1999, she was sitting in Wedgwood Baptist Church in Fort Worth when a gunman walked in and started shooting. Browning was the first of seven to die. In life she was committed to educating the less fortunate. She taught at Success High School, a Fort Worth public school that brought former dropouts back to the classroom. Sydney’s Kids were chosen to honor her. Two days before the shooting, a group of students from Granada Elementary visited GCU to sing Happy Birthday for the school’s 50th anniversary. The students impressed GCU administrators who, the next year, made them a promise: If their grades and test scores were good enough to get in, they would go to the university free. Armando Rivera was one of those students. Now 18, he remembers the parents being more excited than the children. “Honestly,” he says, “at the time, I didn’t understand it.” On Thursday, freshmen Jessica Reyes, Cameron Stafford and Daron Beck chatted in Daron’s dorm room. Jessica, like Armando, plans to be a doctor and will major in biology. Daron will study business. Cameron is thinking of business or marketing. They are all aware that being one of Sydney’s Kids comes with responsibility. “It’s a special gift,” Cameron says. “Now, I have to fulfill it.” Some kids can’t be found On freshman registration and move-in day, faculty and school administrators helped freshmen move into their dorms. Among them were people who helped make the promise and keep it. Joyce Hatch is GCU vice president of financial aid. “I was here when they came and sang,” Hatch says. “I was here when the promise was made.” For a while, the promise seemed in doubt. In the early 2000s, GCU was in dire financial shape. It severed its ties with the Arizona Southern Baptist Convention. In 2004, a venture capital firm bought GCU and turned it into a for-profit institution. But GCU remained committed to Sydney’s Kids. Three years ago Jennifer Hatch, Joyce’s daughter and an admissions counselor, began looking for them. Of the 60 students offered the scholarship, 15 are taking advantage of it. One more will start next semester, and a 17th will enroll next year. Some of the other students hadn’t kept up their grades. The rest moved away or just fell through the cracks. GCU was unable to find some of the students. The promise is still open to them.

An estimated 2.6 million American college freshmen are about to head off to campus. USA TODAY book critic Deirdre Donahue examines four new books about this rite of passage for American teenagers and their parents. Excuse her if she’s a bit wistful: Her own son is part of the departing horde. The iConnected Parent: Staying Close to Your Kids in College (and Beyond) While Letting Them Grow Up Are cellphones, Facebook and e-mail morphing into the campus equivalents of baby monitors? And are these digital tethers healthy for college students and their parents? That’s the question posed by The iConnected Parent , a thoughtful and accessible guide that examines a new reality in which going off to college no longer means a weekly phone call home on Sunday night. Thanks to technology, many parents and children are in constant, daily communication. (The authors, Middlebury professor Barbara Hofer and journalist Abigail Sullivan Moore, provide compelling statistics to back up their point.) They also offer sensible guidelines about how to navigate this unprecedented access to your child’s life in college. They point out why certain behaviors — providing a last-minute edit on a term paper, intervening with a dean because your child says her roommate is mean — can damage your college kid’s ability to solve problems without you, a key element in becoming an adult. Higher Education? How Colleges Are Wasting Our Money and Failing Our Kids — And What We Can Do About It Don’t read this book the night before you drive the little darling to that pricey private college, because you might cancel the trip. Queens College sociology professor Andrew Hacker, author of the best-selling Two Nations , and New York Times reporter Claudia Dreifus take no prisoners in their blistering attack on American colleges and universities, particularly the Ivy League. They compare the $420 billion per year higher education business to American health care, saying it’s a bloated bureaucracy that costs an astronomical amount of money yet fails to achieve its core mission: teaching undergraduates to think, to question, to be inspired. Their claim: This failure is going on at the nation’s 4,352 colleges and universities, from the biggest sports powerhouse to the most elite private enclave. Money doesn’t solve the problem. The authors argue provocatively that Ivy League students are among the least well-served in terms of teaching, despite parents writing those $37,000 tuition checks. Star professors have never had much interest in teaching undergrads, leaving it to overworked, underpaid grad students. But with that price tag? Ouch. The authors propose dramatic solutions: abolish tenure, stop paid sabbaticals, spin off medical schools. Most of all, they want parents, students, politicians, professors and taxpayers to ask themselves, what is the purpose of college? A real education isn’t about job training or establishing a “Best and the Brightest” elite. Because Higher E ducation? wrestles with all sorts of big-picture, philosophical questions, it’s a thought-provoking book. Perhaps a touch too intense for parents writing tuition checks. Debt-Free U: How I Paid for an Outstanding College Education Without Loans, Scholarships, or Mooching off My Parents At age 21, Zac Bissonnette, an AOL finance blogger and University of Massachusetts senior, delivers a real mule kick to the higher educational status quo with his impassioned Debt-Free U . In an admiring foreword, Andrew Tobias gets it right when he says the author is “Doogie Howser meets the boys from Facebook.” Mincing no words, Bissonnette argues that students and their parents must stop taking out loans to pay for college. In 2006-2007, he points out, the average student graduated owing almost $23,000 (with some owing as much as $120,000), while strapped parents took out home-equity loans. This debt will hurt parents approaching retirement and handicap kids entering adulthood. The author writes out of his own experience of growing up with financially improvident parents. (His father’s house is in foreclosure, and his mother lives with her mother.) His advice is old school. Consider community college. Live at home. Save money. Get a part-time job. And parents who want to help? Get a second job. The Happiest Kid on Campus: A Parent’s Guide to the Very Best College Experience (for You and Your Child) By Harlan Cohen Sourcebooks, 618 pp., $14.99, paperback original Taking a cue from the ever-popular What to Expect When You’re Expecting series, Harlan Cohen uses a similar perky approach in his user-friendly The Happiest Kid on Campus. The funny part, despite the “happiest kid” title, is Cohen gently reminding parents and kids that most college students probably won’t be happy at first. Most freshmen are painfully homesick their first semester, and often longer. Not to mention anxious, stressed-out, confused and lonely. But he has a lot of sensible ways to get to happy, if not happiest. Cohen, author of The Naked Roommate , offers advice on how parents should handle move-in day (remember, it’s the kid’s room, not yours), how much digital communication is too much (the roommate she-devil of yesterday’s text might be the BFF of tomorrow, so don’t intervene), and warns against contacting professors about a failed quiz. Some of his tips are stunningly sensible. If your child is shy, encourage him to get a job in the cafeteria or library so he has to leave his room and talk to people. The funniest advice? Mom, no cougar-ing, and Dad, quit leering.