Most Americans cannot identify what a 529 education savings plan is, even on a multiple-choice test, according to a survey released Monday by financial services firm Edward Jones.
Two-thirds of Americans still do not know what the tax-advantaged plan is, even though it is nearly 20 years old, says the 529 Plan Awareness Survey.
The survey, which is in its fourth year, found that only 34 percent of Americans could correctly identify a 529 plan as a college savings tool from among four options. This is a slight increase over last year’s 30 percent, but down from the 2012 results, which showed 37 percent knew what the plans are.
“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,” says Steve Seifert, principal at 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 parent’s retirement age. This, coupled with the fact that the cost of college is increasing at a much higher rate than inflation, means that many [parents] are grappling with how to stay on track to meet savings goals,” Seifert says.
Awareness of 529 plans increased as the respondents’ household income increased. It was also higher in households with children. More families with children under the age of 13 are aware of the plans (41 percent) than those with children ages 13 to 17 (35 percent).
While many are unaware of 529 savings plans, 83 percent of those surveyed say they cannot afford the high cost of college.
“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,” adds Seifert.