Americans appear to be getting less and less knowledgeable about 529 college savings plans, according to a new study by Edward Jones.
The 529 Awareness Survey found that only 30 percent of the respondents knew what a 529 plan is, a decrease from 37 percent in the first report issued in 2012 and a slight decrease from 31 percent last year. The survey respondents were given a multiple choice question with four options.
“It seems counterintuitive that the costs of higher education continue to rise while awareness for a vehicle than 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,” says Greg Dosmann, principal with Edward Jones.
Significant dips in awareness occurred regionally, especially in the Northeast (39 percent in 2014, down from 45 percent in 2013) and the Midwest (30 percent in 2014, down from 36 percent in 2013).
Age plays a significant role in awareness level, with those between 35 and 54 years old expressing the highest levels of awareness. Respondents 65 and older showed the lowest levels of awareness, with just 18 percent saying they know what 529 plans are. This represents an opportunity for advisors and parents to make grandparents aware of this tax-advantaged way of giving, according to Edward Jones.
A decline was also seen for income levels. For those earning $50,000 to $75,000 the awareness level dropped from 42 percent last year to 32 percent this year. The awareness level was lower but still decreasing for those earning $35,000 to $50,000, which declined from 32 percent last year to 24 percent this year.