ST. LOUIS, May 22, 2013 /PRNewswire/ -- The rising cost of college education continues to dominate news headlines, yet less than one-third of Americans say they know what 529 plans are, according to the latest 529 Plan Awareness Survey released today by financial services firm Edward Jones. As 529 Plans are tax-advantaged long-term investment vehicles designed specifically for future higher education expenses, the survey reveals a startling gap in college saving and preparation awareness.
"Without a doubt, the cost of college can be a daunting figure for families to navigate," said Greg Dosmann, a college savings expert at Edward Jones. "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."
This is the second year Edward Jones has conducted its 529 Plan Awareness Survey, with this year's data revealing a six point dip in awareness overall – a potentially detrimental trend. One of the biggest changes from the 2012 survey occurred among respondents aged 18 to 34 and 35 to 44, whose awareness dropped 11 points and eight points, respectively. As the two groups closest to child-bearing and -rearing age, the dip was particularly surprising.
This year's survey also revealed a substantial difference in awareness across the country. While 45 percent of respondents in the Northeast correctly identified what a 529 Plan is, just 26 percent of respondents in both the Southern and Western regions of the country were able to do so.
Household income level provided a clear difference among respondents as well, with awareness levels increasing as wealth levels increased. For instance, just 18 percent of respondents with household incomes less than $35,000 know what a 529 Plan is, compared to 32 percent of those with household incomes between $35,000 and $50,000. Awareness rose to 51 percent amongst the wealthiest households surveyed, which earn $100,000 or more annually.
In addition to asking respondents about their knowledge of 529 Plans, the Edward Jones study also looked at whether Americans believe a college degree is worth the expense. The survey 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. While the majority of respondents said they believe a college degree is worth the cost, more than 25 percent of respondents disagreed. Furthermore, of the 72 percent who said the debt was worth a degree, 38 percent stipulated that it was worth it, "only if the student will be going into a high-paying industry."
"Figuring out the best plan for long-term savings can be unnerving for many families, which is why we want to use this month's '529 Day' to help educate parents about their options," said Dosmann. "Taking the time to sit down with a financial advisor to discuss the pros and cons of certain state-sponsored 529 Plans and other savings tools can often be enough to kick-start the program. We suggest the first thing parents and grandparents think about is whether they want to position themselves to pay for all, some or none of their children's or grandchildren's college expenses as this can shift the planning discussion. But in the end, pursuing higher education continues to be a lifelong goal for millions across the country, and by saving early and often, we can help our children graduate with less - or even no - debt."
In an effort to raise awareness for 529 Plans, Edward Jones branches across the country are recognizing May 29 as "Save for Education Day," a firm-wide holiday derived from the name of the popular college saving tool. To remind communities about the importance of setting education savings goals, financial advisors will be hosting a "529 Day" at their respective branches and dressing in "college casual" attire from their favorite colleges or alma maters. Families are encouraged to stop by their local branches to learn more about planning for their children's educational future.
About Edward Jones
Edward Jones provides financial services for individual investors in the United States and, through its affiliate, in Canada. Every aspect of the firm's business, from the types of investment options offered to the location of branch offices, is designed to cater to individual investors in the communities in which they live and work. The firm's 12,000 financial advisors work directly with nearly 7 million clients to understand their personal goals – from college savings to retirement – and create long-term investment solutions that emphasize a well-balanced portfolio and a buy-and-hold strategy. Edward Jones embraces the importance of building long-term, face-to-face relationships with clients, helping them to understand and make sense of the investment options available today. Edward Jones, which ranked No. 8 on FORTUNE magazine's "100 Best Companies to Work For 2013," is headquartered in St. Louis. The Edward Jones Web site is located at www.edwardjones.com, and its recruiting Web site is www.careers.edwardjones.com. Member SIPC.
Survey was conducted by ORC International's CARAVAN Omnibus Services and was based on 1,013 landline and cell phone interviews of U.S. adults conducted between April 18-21, 2013. The margin of error was +/-3%.
SOURCE Edward Jones