These investors would rather receive a guaranteed return on their investments that offsets increases in tuition than rely on stock market returns that could be lost.
Only 13 percent of respondents indicated they would rather attempt to beat the recent college tuition inflation rate of 6.5 percent by investing in the stock market. But the recent drop in interest rates makes it harder for investors to cover college costs by putting funds in safer, interest-bearing accounts.
“Given the historically low interest rates, now is a very challenging time for college savers who are seeking safety from equities,” said Nancy Farmer, the organization’s president, in prepared remarks.
Still, the survey found that half (50 percent) of respondents saving for college do not believe the stock market will provide the returns needed over the next 10 years to help them achieve their college savings goals. Less than one-third of respondents (32 percent) believe the market will produce the desired returns.
Market skepticism is driving college savers to opt for investments and savings vehicles that carry less risk, such as CDs and money market funds, and offer guaranteed returns, the survey found.
The poll tapped the opinions of 1,008 adults between Oct. 7 and 10, 2010.