BOSTON, August 18, 2004 - While few parents and teenagers may see eye-to-eye on issues related to money, when it comes to paying for college they have more in common than you may think. In fact, virtually all teenagers (95 percent) feel an obligation to shoulder some of the financial burden of their college education, with three-quarters (74 percent) thinking that their parents should only pay half or less, according to a natio nal study released today by Fidelity Investments.

Marking the fourth annual College Savings Month in September¹, the Fidelity study reveals that the majority of teenagers who think their parents should be responsible for only half or some of the cost of their college education would "feel badly" if their parents paid for all of it. Although it's admirable that teenagers want to help their parents pick up the cost of their college education through student loans, many may not realize the future financial impact of doing so. In fact, in 2002, the average undergraduate debt reached $17,100 or a monthly payment of $182². With rising tuition rates, student loan payments may put considerable stress on college graduates trying to live on entry level salaries.

"The good news is that parents and teens recognize the importance of saving for college, and many have already started to save," said Tracy Lemoine, senior vice president, Fidelity Investments Institutional Services Company, investment manager for the Fidelity Advisor 529 Plan. "However, our research shows there is a significant gap between when parents think they should save for college and when they actually start to save for college. Additionally, many parents are not maximizing their college savings through a tax-advantaged account."

The Fidelity study is designed to better understand parents' and teenagers' behavior, expectations, and concerns on the topic of paying for college. It is part of Fidelity's program to educate families and financial advisors about the importance of having a plan to help with college costs, as well as understand the potential benefits of 529 Plans.

Parental Intentions vs. Financial Reality

The study reveals that under ideal circumstances the vast majority of parents (93 percent) would help pay for their teenager's college education, with half saying they would be willing to pay for all or most. For those parents, it is important to them that their child be able to focus on his or her studies in college and that children not be burdened with debt upon graduation.

Despite the majority of parents' plans to make significant contributions to their child's college education, many wish they could do more. In fact, two-thirds do not plan to contribute as much toward the cost of their teen's college education as they would have under ideal circumstances. Not starting to save early enough was one of the reasons parents cite for the lack of funds. Yet, according to the study, there is a gap between when parents think they should start saving for their child's college education and when they actually do. On average, parents think they should start saving for college before the child is two years old - in reality they start saving when the child is almost six.

Additionally, scholarship expectations are high, with eight out of 10 (79 percent) parents saying they expect to rely on them when paying for college. Teenagers tend to be more realistic than parents, with six in 10 (62 percent) considering a scholarship as an option.

"While outside sources such as scholarships and financial aid can play a role in helping meet the skyrocketing cost of college, it is risky for parents to rely too heavily on their child receiving such funds ," said Lemoine. "Whether they are just getting started, or they have been saving for years, we encourage families to sit down with a financial advisor to review their college savings goals and strategies, and understand all of the options that are available to them and their children."

Missed Savings Opportunity

While the majority of parents are saving for college (87 percent), only one-third (34 percent) of these parents are utilizing a tax-advantaged investment vehicle such as a 529 Plan. While that number is up significantly over the past few years, the most popular strategy used is simply to make regular deposits into any type of account specifically for college savings.

"While our study shows that the use of tax-advantaged investments, such as a 529 Plan, for college savings has increased since 1999, we believe , as do our advisor clients, that there are additional opportunities to further educate families on the potential benefits of these investment vehicles and help them select the right plan," said Lemoine. "We all know that time in the market is important. With college funds, you typically have a fixed amount of time. If we can help parents start saving for college earlier and use a tax-advantaged plan, like the 529 Plan, we believe they may improve their chances of building the funds they need to help pay for their child's college education."

Teens Are Aware and Concerned

Despite being only a few years away from college, the majority (64 percent) of teenagers report not knowing how much their college education will cost. However, 54 percent equated the cost of an average four-year college education to the cost of a luxury car or a year's worth of their parents' salary, demonstrating they may have a better sense of college costs than they think.

Even though teens feel an obligation to help pay for college and, in fact, the majority have started saving, two-thirds (67 percent) are "somewhat" or "very concerned" about not having enough money to pay for their college education. Of those teens who think their parents should pay for all or most of the cost of their education, almost half (46 percent) say they will not be able to go to college otherwise. In addition, some teens who are concerned about money say their college experience may be affected in the following three ways : 1) They can only go part-time because they have to work to help pay for it; 2) They can only apply to schools with tuition rates below a certain amount; and 3) They can't go to their top choice school.

Despite the concerns of many teens and parents about not having enough money to pay for college, a significant number of families have not discussed the subject. In fact, 42 percent of parents say they did not include the topic of who will pay for college in their college-planning discussions with their teen.

The Fidelity study was conducted by Opinion Research Corporation with 477 college-bound teens (aged 14-17 years old) and 376 parents of college-bound teens with household incomes of $35,000 or more. Teenagers were surveyed from May 20 to May 30, 2004 and parents from May 27 to June 20, 2004. The maximum margin of error for both surveys is +/-5 percent at the 95 percent confidence level. A similar study was conducted in 1999 among a nationwide sample of 503 parents of college-bound teens.

About Fidelity-Managed 529 College Savings Plans

Fidelity-managed 529 Plans offer residents of any state the opportunity to save federal income tax-deferred for their children's future college education. The plans offer federal income taxfree qualified distributions to most accredited colleges and universities nationwide and at eligible foreign institutions³, as well as professional money management and the ability for Participants to maintain control of an account specifically dedicated for college savings. Parents, grandparents and others can start saving for as little as $50 a month through automatic investments⁴. Additionally, they can sign up for the Fidelity Investments 529 College Rewards^SM Mastercard^®, and earn rewards points on all eligible retail purchases when deposited in a Fidelity-managed 529 plan account⁵.

Fidelity manages $4.7 billion in college savings dollars in 529 Plans including the Fidelity Advisor 529 Plan, UNIQUE College Investing Plan, U.Fund College Investing Plan and the Delaware College Investment Plan, as of June 30, 2004. For more information on the Fidelity Advisor 529 Plan, investment professionals can visit http://advisor.fidelity.com/529 or call 1-800-544-9999. Families interested in learning more about their college savings options can visit www.fidelity.com, call 1-800-544-1914 or stop by any of Fidelity's 97 investor centers nationwide.

About Fidelity Investments Institutional Services

Fidelity Investments Institutional Services Company provides investment management services through investment professionals at financial institutions nationwide, including wirehouses, regional and independent broker/dealers, banks, trust companies and insurance companies. The company offers Fidelity Advisor Funds^®, Variable Insurance Product (VIP) Portfolios, systematic investment plans, institutional money market funds and a comprehensive line of retirement products and services. Fidelity Investments Institutional Services Company's total assets under management were $202.4 billion as of June 30, 2004.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $1.9 trillion, including managed assets of $1.0 trillion as of June 30, 2004. Fidelity offers investment management, retirement planning, brokerage, human resources and benefits outsourcing services to 21 million individuals and institutions as well as through 5,500 financial intermediaries. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, one of the largest mutual fund supermarkets and a leading online brokerage firm. For more information about Fidelity Investments, visit www.fidelity.com.

¹ The College Savings Plans Network has been joined by more than 40 states in declaring September 2004 "College Savings Month."

² Nellie Mae's "2002 National Student Loan Survey," which is conducted once every 4-6 years.

³ Pursuant to the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"), qualified distributions are federal income tax free. The provisions of EGTRRA will expire on December 31, 2010. Unless the law is extended by Congress and the President, the federal tax treatment of 529 plans will revert to its status prior to January 1, 2002.

⁴ Periodic investing plans do not guarantee a profit or protect against a loss in a declining market.

⁵ Earn rate and points limit may be subject to change. Currently, cardholders are limited to 1,500 points per rolling twelve months based on the anniversary date from which the card was first used. Other restrictions apply. Full details are provided in the Program Guidelines documents. For rate, fee and other cost information, and to learn more about the benefits of the Fidelity Investments 529 College Rewards program, please refer to the online credit card application at www.fidelity.com or call 1-800-433-0480. For investment professionals, please refer to www.advisorxpress.com or call 1-800-433-0480. This credit card program is issued and administered by MBNA America Bank, N.A., which is not an affiliate of Fidelity Investments, and does not offer, manage, or guarantee any of the 529 plans managed by Fidelity Investments. The information or material describing this credit card program is neither a solicitation nor a recommendation by any distributor of the Fidelity Advisor 529 Plan. The card is made available by MBNA America Bank, N.A. directly to participants in the Fidelity Advisor 529 Plan program.

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Fidelity Investments Institutional Services Co., Inc.
82 Devonshire St., Boston, MA 02109

The Fidelity Advisor 529 Plan is offered by the state of New Hampshire and managed by Fidelity Investments. The UNIQUE College Investing Plan, Delaware College Investment Plan, and U.Fund College Investing Plan are offered by the State of New Hampshire, State of Delaware, and Massachusetts Educational Financing Authority, respectively and managed by Fidelity Investments. If you are not a New Hampshire, Delaware, or Massachusetts resident, you may want to investigate whether your state offers its residents a plan with alternate tax advantages

Units of the Portfolios are municipal securities and may be subject to market volatility and fluctuation.

Please carefully consider each Plans ' investment objectives, risks, charges and expenses before investing. For this and other information on any 529 College Savings Plan managed by Fidelity, call or write to Fidelity for a free Fact Kit, or view online. Read it carefully before you invest or send money.

Brokerage services for the direct sold 529 plans are provided by Fidelity Brokerage Services, LLC. Member NYSE, SIPC. 100 Summer Street, Boston, MA 02110