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Why parents can't save for their kids' college

Why aren't American parents saving for their kids' college bills? Because many are still paying off their own.

"As we continue to debate the value and cost of higher education, we must acknowledge the difficult balancing act many parents face when repaying their own debt and saving for their children," said Eleanor Blayney, consumer advocate for the Certified Financial Planner Board of Standards.

The CFP board released a survey Wednesday, saying that almost half of surveyed parents have not started saving for their children's college bills. Grappling with their own student debt was the reason cited by 31 percent of respondents who had not yet started saving, according to the survey of 1,003 parents with children under the age of 18.

Half of surveyed parents said they borrowed to finance their own college education, and 42 percent still have debt to repay, according to the survey. About 15 percent of this group has more than $25,000 in education debt outstanding.

Among the minority who are saving for their kids' college bills, the bulk (53 percent) have put away less than $10,000 for their oldest child.

That's a far cry from what the College Board estimates higher education will cost. The cost of a single year of public school (including room and board) is now pegged at $18,391 for an in-state resident and $31,701 for those going to an out-of-state public university. A year at private school costs an average of $40,917.

Parents' college debts are also keeping them from saving for other financial needs, according to the survey. Some 33 percent said this debt has prevented them from starting an emergency fund, and 32 percent said it has prevented them from saving for their own retirement.

"With tuition rates rising year after year, financing a child's higher education may very well be a more expensive investment than buying a home and a lot harder to finance," Blayney added. "Finding the funding for college may require careful planning and several sources."

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