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Most College Savers Don’t Know About 529 Plans: Edward Jones

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What You Need to Know

  • Fifty-one percent said they either didn't know what a 529 plan is or could not answer the question about it.
  • Nearly half said the rising cost of higher education is affecting their savings plans.
  • But just 11% said they would save more toward their education.

Fifty-five percent of Americans in a new survey said they consider saving for education a top priority, notwithstanding the pandemic and rising inflation, Edward Jones, a financial services firm, reported this week. In last year’s survey, 51% of respondents held this opinion.

At the same time, only 40% of participants recognized a 529 plan as an education savings tool, a tiny improvement from last year. Fifty-one percent said they either did not know what a 529 plan was or could not answer the question about it. 

Only 19% of respondents were aware that 529 plans fund more than just higher education.

“We’re excited to see that Americans’ steady focus on education savings has not waivered despite continued curveballs like inflation and rising costs,” Steve Rueschhoff, leader of managed investments and insurance at Edward Jones, said in a statement. 

“That said, Americans are leaving money on the table by not leveraging critical savings strategies such as 529s.”

Morning Consult conducted Edward Jones’ 11th annual 529 awareness survey among a national sample of 2,220 adults.

Reconsidering Savings Strategies

The survey found that among those who are more or less likely to consider changing their education plans, 49% cited the cost of higher education as the primary factor, 37% pointed to inflation and 28% said COVID-19. 

Edward Jones, citing College Board research, noted that tuition for in-state students attending a four-year public college in the 2021-2022 academic year increased by 1.6%; for students attending a four-year private institution, it increased by 2.1%. 

According to the survey, 35% of Americans are using an education savings strategy as their main tool amid tuition increases, up 5 percentage points since 2020.

But only 13% of Americans are using 529 plans, down 8 points since 2020.

Even with these strategies and tools, 45% of respondents said they did not feel they were saving enough to cover their future education expenses. Of these, 23% said working with a financial advisor to guide their financial decisions would help ease their concerns about budgeting for college savings.

“Leveraging the knowledge of a financial advisor can help you identify the different approaches for savings for education costs, as well as to understand the trade-offs this may have on your other financial goals,” Rueschhoff said.

Edward Jones said its findings point to a need to find new motivations to save. Fifty-nine percent of survey respondents said the national pause on all federal student loan payments over the last two years, and the prospect of college debt forgiveness, have not influenced their savings patterns.

As they think through financial decisions and savings goals over the next five years, just 11% said they would contribute more to higher education savings.