Americans now hold $179 billion in 529 college savings plans, but less than a third of Americans actually know what a 529 plan is, according to a recent survey by Edward Jones. Awareness is particularly low in the South and West.
The second-annual 529 Plan Awareness Survey also found that while a majority of Americans say a college education is worth the student debt load, which averages $27,000, many say the investment is worthwhile only if it means they’ll get a high-paying job.
This year’s survey revealed a six-point dip in 529 plan awareness overall, what Edward Jones calls a “potentially detrimental trend.” One of the biggest changes from the 2012 survey occurred among respondents ages 18 to 34 and 35 to 44, whose awareness dropped 11 points and eight points, respectively, the survey says.
Another surprising change is a “substantial” difference in 529 plan awareness across the country. While 45% of respondents in the Northeast correctly identified what a 529 plan was, just 26% of respondents in both the Southern and Western regions of the country were able to do so, the survey found.
Awareness levels also varied by household income levels, the survey found. For instance, just 18% of respondents with household incomes less than $35,000 said they knew what a 529 Plan is, compared with 32% of those with household incomes between $35,000 and $50,000.
Awareness rose to 51% amongst the wealthiest households surveyed, which earn $100,000 or more annually, the survey notes.
“Without a doubt, the cost of college can be a daunting figure for families to navigate,” Greg Dosmann, a college savings expert at Edward Jones, said in a statement announcing the survey’s findings. “Tackling this goal over the long term can reduce much of the stress caused by those costs. We tell our clients that it can take a family to fund a 529 plan, and by taking a long-term savings approach through a vehicle like a 529 plan, families can chip away at the final costs over a period of 15 or more years.”
Edward Jones’ survey also explained that students who take out loans to pay for college will graduate with an average of $27,000 in debt, referencing a study conducted by the Institute for College Access and Success. Edward Jones then asked survey respondents if racking up that debt was worth it.
While the majority of respondents said they believed a college degree was worth the cost, more than 25% of respondents disagreed. Furthermore, of the 72% who said the debt was worth a degree, 38% stipulated that it was worth it “only if the student will be going into a high-paying industry.”
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