College savings plans are more useful and relevant than ever, but most Americans are still unfamiliar with them.
According to the 2017 edition of St. Louis-based Edward Jones’ annual “529 Plan Awareness Survey,” just 32 percent of Americans can correctly identify a 529 plan as an option for saving for college expenses. Awareness of 529s increased by 4 percentage points from 28 percent in 2016, reversing a decline in awareness from 2015 to 2016.
“When we asked the same group if they thought getting a college degree was important, about 95 percent of them said yes,” says Kyle Andersen, principal with Edward Jones. “People understand the importance of the issue, but still only 30 percent of them are aware of one of the best tools to save for higher education.”
The low levels of awareness come 21 years after the tax-advantaged college investment accounts were first offered, and follow several years of concerted marketing efforts on the part of states and 529 sponsors.
As part of its efforts to drive awareness about the accounts, the Lexington, Ky.-based College Savings Plans Network (CSPN) is kicking off 529 Day celebrations across the U.S.
“We need to make advisors more aware of the vehicles out there for saving for college, and there’s no better way to accomplish that than education,” says Young Boozer, the state treasurer of Alabama and CSPN’s chairman. “We’re working on a national plan to increase awareness. We’re looking at every avenue to get the word out there.”
States are responsible for originating and maintaining 529 savings plans—thus the plans vary from state to state and don’t have a single account structure. Some states tend to be internally focused and design plans to serve their residents, while others look nationally.
Boozer says that the fractured, less-uniform nature of 529 accounts may actually help CSPN spread awareness of their existence and usefulness.
“The combination of local efforts at the state level, and efforts by national programs like CSPN should create an adequate, multi-layered effort to advertise, market and promote these plans,” says Boozer. “We acknowledge that, based on these numbers, we obviously need to do better.”
Edward Jones found that awareness of 529 plans differed by generation. Members of Generation X, aged 35 to 52, were the most likely to identify 529s correctly. Forty-seven percent knew what one was, while only 30 percent of millennials (those aged 18 to 34) knew and only 29 percent of respondents older than 52 knew.