Three out of every four Americans (72 percent) still do not know what a 529 college savings plan is, according to the annual 529 Plan Awareness Survey from financial services firm Edward Jones.
In its fifth year monitoring college-savings awareness, the survey found that fewer Americans could correctly identify a 529 plan as a college savings tool from among four potential options. This is down 6 percentage points from 2015 (66 percent) and reveals a decrease in awareness overall. These college savings plans were first offered to Americans in 1996.
“The cost of education remains a top concern for many Americans, and yet the downward trend in 529 awareness persists year over year,” said Steve Seifert, Principal at Edward Jones. “We must continue to teach individuals and families about the investments, like 529 college savings plans, that offer attractive and practical ways to save for future college expenses. Balancing multiple savings priorities on a month-by-month basis can be challenging, but we cannot skimp on one goal at the expense of another.”
Awareness varied by several factors including household income, size and age. Respondents with a household income of $100,000 or more were significantly more likely to correctly identify 529 plans (46 percent), than those with less than $35,000 (only 18 percent). Similarly, respondents with children were more likely to correctly identify 529 plans as a college savings plans, compared to those without children (32 percent vs. 26 percent). Understanding was also influenced by age, with awareness peaking among Gen Xers (35 percent) and reaching the lowest point among Millennials (24 percent).
The value of a college degree
The survey found that a majority of Americans (88 percent) believe a college degree is important for future employment, with almost half (49 percent) of Americans agreeing that you cannot get a job without a college degree. Baby Boomers were the most likely to echo this sentiment (53 percent), compared to their millennial counterparts (43 percent) who believe the same.
“While most Americans agree that a college education is an important investment, they are not taking advantage of the tools that help make the most of their savings,” added Danae Domian, Principal at Edward Jones. “As the cost of college continues to increase, it’s especially critical that you do your homework on the investment options available to you. The 529 college savings plan can be a great fit for many families as they prepare for their children’s future.”
Employers are taking notice
Concerns about affording the cost of college remain top of mind for most Americans. In response, some companies are beginning to add 529 plan aid to workplace-benefits packages. When asked how likely they would be to participate in such a benefit, the majority (86 percent) of respondents answered in the affirmative. In fact, nearly all (93 percent) respondents with children ages 13-17 indicated that they would likely participate if such a benefit was offered by their employer.
The survey was conducted by ORC International’s CARAVAN Omnibus Services and was based on 1,006 phone interviews of U.S. adults conducted from April 28-May 1, 2016.