Majority unaware of 529 plans
By Lisa Barron
The awareness level of college savings tools is not keeping pace with the cost of education, according to a survey by Edward Jones.
The May poll of 1,000 adults found that 70 percent of Americans do not know that 529 plans are a college savings tool, up from 63 percent in 2012.
That means that just 30 percent of Americans can identify a 529 plan as a college savings tool from among four potential options compare to 37 percent two years ago.
“Despite the fact that the average cost of an in-state public college totaled $22,828 in the 2013-2014 academic year, we have seen a downward trend in 529 plan awareness over the past three years,” said Greg Dosmann, principal with Edward Jones.
“It seems counterintuitive that the costs of higher education continue to rise while awareness for a vehicle that can make this cost more manageable continues to decline. We like to remind our clients that starting a 529 plan savings program as early as possible will help ease the burden as children near college age.”
The study found major differences in 529 awareness geographically. In the Northeast, the level of awareness stands at 39 percent compared to 45 percent in 2013, while in the Midwest the level of knowledge is 30 percent, down from 36 percent last year.
There are also differences by age. Respondents 65 and up have the lowest levels of awareness, 18 percent.
“Grandparents represent an opportunity when it comes to managing the cost of college,” said Dosmann. “Talking to grandparents about participating in 529 plans is an excellent way to build assets in a portfolio — and for the grandparents, it’s fulfilling and there may be tax advantages as well.”
Edward Jones said its 12,000 advisors nationwide will recognize May 29 as “Save for Education Day.” Branches across the country will host events to remind families about the importance of setting up education savings goals.
Originally published on BenefitsPro.com