As education costs in the U.S. continue to rise, just 29% of Americans in a recent survey correctly identified a 529 plan as an education savings tool, down three percentage points from the 2017 survey, Edward Jones reported Monday.
“It’s concerning to see the percentage of individuals who still don’t know what a 529 plan is or understand its usefulness in preparing to tackle education expenses,” Danae Domian, an Edward Jones principal, said in a statement. “There’s a misperception that only parents can establish these plans. But in reality, any person can set up a plan for any student.”
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The survey results came from 1,004 landline and cell phone interviews of U.S. adults conducted mid-April by ORC International’s CARAVAN Omnibus Services.
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Several factors, including respondents’ age, influenced respondents’ awareness of 529 plans, according to the survey. Thirty-five percent of Gen Xers correctly identified 529s, compared with 27% of millennials.
In addition, 529 awareness increased with household income. Fifty-two percent of individuals with a household income of $100,000 or more correctly identified a 529 plan, versus just 17% of those with less than $35,000.
So, how do Americans save for education?
The survey results showed that 43% of respondents used, or planned to use, their personal savings to pay for higher education expenses. Thirty-three percent said they would depend on scholarships, 31% on federal or state financial aid and 20% on private student loans.
Placing dead last were 529 plans, with a mere 13% of respondents saying they would use that strategy.
The survey uncovered some grim findings about how much individuals are saving — or not saving — toward future education expenses. On average, 50% of respondents said they were saving anything on an annual basis.
That figure dropped to 41% for individuals with children under 13.