NEW YORK (MainStreet) Seven out of ten Americans are not aware of that 529 plans are a college savings tool even as higher education costs continue to rise, according to a recent Edward Jones survey.
Only 30% of Americans can correctly identify a 529 plan as a college savings tool from among four potential options, the survey revealed. In 2012, 37% of Americans could identify them correctly.
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"Despite the fact that the average cost of an in-state public college totaled $22,828 in the 2013-2014 academic year, we have seen a downward trend in 529 plan awareness over the past three years," said Greg Dosmann, principal with Edward Jones, the St. Louis-based financial services firm. "It seems counterintuitive that the costs of higher education continue to rise while awareness for a vehicle than can make this cost more manageable continues to decline. We like to remind our clients that starting a 529 plan savings program as early as possible will help ease the burden as children near college age."
The survey also found that significant declines in awareness occurred regionally, especially in the Northeast with 39% in 2014, down from 45% in 2013 and only 30% of people in the Midwest could identify them, down from 36% in 2013. A notable decline in 529 plan awareness also occurred when examining household income. Among those respondents with a household income between $50,000 and $75,000, awareness dropped from 42% in 2013 to 32% today.
The lack of awareness can be attributed to the fact that many consumers, especially Gen X-ers, generally defined as those born from 1965 through 1980, lack the resources to save adequately for themselves and for their children.