Two-thirds of Americans still don't know what a 529 Plan is, according to Edward Jones Study

Two-thirds (66 percent) of Americans still don’t know what a 529 plan is, according to the annual 529 Plan Awareness Survey from financial services firm Edward Jones.

In its fourth year monitoring college savings awareness, the survey found that only 34 percent of Americans could correctly identify a 529 plan as a college savings tool from among four potential options, up slightly from 30 percent in 2014 but down compared to the inaugural 2012 survey (37 percent). These college savings plans were first offered to Americans in 1996.

“Despite headlines focused on the increasingly high costs of college, we still see a significant number of Americans who aren’t aware of one of the most important long-term savings vehicles that can help minimize the impact that the cost of education has on families,” said Steve Seifert, a principal with Edward Jones.

“Demographically, people are living longer and having children later in life, narrowing the time between a child’s college bills and his or her parents’ retirement age. This, coupled with the fact that the cost of college is increasing at a much higher rate than inflation, means that many are grappling with how to stay on track to meet savings goals.”

Awareness varied by several factors including household income, size and number of children. Respondents with a household income of $100,000 or more were significantly more likely to correctly identify 529 plans (58 percent), than those with less than $35,000 (only 25 percent). Similarly, awareness also increased depending on household size and number of children. Americans with a household of three or more people reflected more awareness (40 percent) than those with a household of two people (30 percent). Surprisingly, respondents with children ages 13 to 17 years were actually less likely to correctly identify the college savings plan than those with children under the age of 13 (35 percent versus 41 percent, respectively).

High Cost of College

The survey also asked respondents to indicate whether or not they believe they can afford the full cost of a college for themselves or a family member.

While male respondents were twice as likely to indicate “yes” than their female counterparts (21 percent compared to 11 percent of women), overwhelmingly, Americans say they simply can’t afford the cost (83 percent). Interestingly, even higher income levels did little to help, with just 37 percent of the highest earning respondents (those making $100,000 a year or more in household income) saying they could afford the cost.

“While the cost continues to be a major concern, Americans still recognize the value of a college education, so finding ways to manage those costs becomes paramount in the process,” Seifert said. “We need to remind them of the wide array of strategies that exist and help them put their goals into action through designing a plan that utilizes the appropriate tools in support of their savings goals.”