Study Shows One in Five Know Purpose of a 529
WASHINGTON, D.C. – One-third of Americans have heard of 529 college savings plans but only one in five know what the plans are for. That’s according to a survey released by the College Savings Plans Network ahead of 529 Day, which found a tie between 529 awareness and saving for higher education.
The survey was conducted prior to the commencement of the network’s national 529 awareness campaign in March. Involving state treasurers, higher education agencies, financial service firms and other state officials in 28 states, the campaign aims to make “529” a more recognizable term for Americans of various means.
“To help minimize student debt for future generations, we are working to reverse the ‘never heard of it’ statistic,” said Young Boozer III, chairman of the national 529 campaign. “To invest in a child’s future, you don’t need to make a lot of money. All it takes is consistently saving over time with a 529.”
Conducted by the campaign in early 2019, the study found that those who are aware of 529s are much more likely to be saving for higher education. Boozer said the survey’s indication that a little knowledge can go a long way should be a motivating factor this 529 Day. 529 Day is observed on May 29 (5/29) by state plans throughout the country as an opportunity to increase awareness of the college savings plans.
Similar to recent findings from other sources, 32 percent claimed to have heard of 529 college savings plans. When asked about the purpose of a 529, only 22 percent could connect the plans to education. Among those surveyed, the least aware age groups were 18- to 29-year-olds, at 27 percent, and those over age 60, at 29 percent.
“In this country we’re having a healthy debate on how to minimize student debt for future generations,” Boozer said. “Unlike other proposals, the 529 approach is not hypothetical. It is real. Parents, grandparents, aunts and uncles can take matters into their own hands today to lessen what a child has to borrow tomorrow.
“It can be done with as little as $10 a week.”
Based on assumptions built into the campaign’s 529 investment calculator, setting aside $10 a week over 18 years to invest in a 529 plan can add up to around $15,000 – half of the average student debt upon graduation. Conversely, the College Savings Plans Network estimates the cost of not saving that amount, and having to borrow and repay with interest, would amount to $21,650 in student debt.E
Minimum contribution requirements, as well as the state tax benefits of each 529 plan, vary from state to state. Some plans have no minimum contribution threshold, while others have minimums generally varying from $10 to $25.
As of December 2018, according to the College Savings Plans Network, more than 13 million 529 accounts were open with an average amount of $22,500. The national campaign hopes to spark an increase in the total number of accounts by “making 529 a household number,” as stated by Boozer, and a term as recognizable as 401(k).
ABOUT THE NATIONAL 529 CAMPAIGN
The “For Their Future Movement” involving 48 partners in 28 states and Washington, D.C., launched on March 4, 2019. The public-private partnership was formed on the basis of increasing awareness of 529s, which help families save for higher education and lessen reliance on student loans. The effort marks the first time state plans and their partners have united to launch a national campaign. The partners’ 529 message is being amplified throughout 2019 and into 2020 under an agreement with Fred Rogers Productions. The campaign’s spots air before and after episodes of the PBS KIDS series Daniel Tiger’s Neighborhood.
529s are offered by states and a private college consortium. Individuals are encouraged to read all plan offering materials – including information regarding minimum contribution amounts – in their entirety before making an investment decision. Click here for information on the features of various 529 plans.
ABOUT THE SURVEY
The CSPN National Awareness Benchmark Research survey was an online survey conducted by Bozell using Survey Monkey. The study was fielded Jan. 28 to Feb. 16, 2019. A total of 2,003 respondents completed the survey, providing for a +/-2.54 percent margin of error. Participants were recruited through the survey company and through social media invitations.