Parents are extremely risk adverse when it comes to setting aside assets for their children's college education. At least that is the finding of a new survey conducted by Aegon Institutional Markets; this is the second annual survey on saving for college. The survey also holds out some rays of hope for firms that administer 529 plans.

The survey questioned 500 parents. 70 percent described themselves as conservative when investing for their children's college fund.

"We have seen a lot in the last year -- both in the world and in the stock market -- that has not exactly been normal. All of that has had an impact. There was a nine percent jump over last year among respondents who said they were conservative," Connie Dorval, director of marketing and communications at the firm, told the MutualFundWire.com.

"Though parents are very conservative in some areas, they are extremely optimistic in others," Dorval reported. "The expectations of returns are very high. They expect an annual return of 19 percent on their investments. That is a very high expectation in a down stock market."

Other statistics that are of interest:

67 percent of those who save begin saving when their children are under five (31 percent begin saving when their children are less than a year old),
only 10 percent of investors have switched to a more conservative or more aggressive investment over time,
73 percent staid the same,
and 90% believe that there are some investments that are just too risky for a college fund.

"Parents tend to be very selfless when it comes to their children's education. They are much less willing to take risks than with, say, their own retirement savings," the executive explained.

On the 529 front, things are starting to look up. "Eight percent were aware of 529 plans last year. That number has gone up to 16 percent this year. One percent of respondents used a 529 plan last year. Four percent do so this year," Dorval contended.

The breakdown of other investment products utilized when saving for college are as follows:

61 percent use a bank savings account (up from 54 percent in 2001),
44 percent use mutual funds,
37 percent use U.S. savings bonds,
30 percent use stocks,
25 percent use money markets,
23 percent use certificates of deposit,
and 21 percent use education IRAs.

Relatively speaking, awareness of 529 plans is still low.

On average, parents feel they must save $80,400 for their children's tuition.

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