ST. LOUIS, May 17, 2016 /PRNewswire/ -- Three out of every four Americans (72 percent) still do not know what a 529 college savings plan is, according to the annual 529 Plan Awareness Survey from financial services firm Edward Jones. In its fifth year monitoring college savings awareness, the survey found that fewer Americans could correctly identify a 529 plan as a college savings tool from among four potential options, down 6 percentage points from 2015 (66 percent) and revealing a decrease in awareness overall. These college savings plans were first offered to Americans in 1996.
"The cost of education remains a top concern for many Americans, and yet the downward trend in 529 awareness persists year over year," said Steve Seifert, Principal at Edward Jones. "We must continue to teach individuals and families about the investments, like 529 college savings plans, that offer attractive and practical ways to save for future college expenses. Balancing multiple savings priorities on a month-by-month basis can be challenging, but we cannot skimp on one goal at the expense of another."
Awareness varied by several factors including, household income, size and age. Respondents with a household income of $100,000 or more were significantly more likely to correctly identify 529 plans (46 percent), than those with less than $35,000 (only 18 percent). Similarly, respondents with children were more likely to correctly identify 529 plans as a college savings plans compared those without children (32 percent vs. 26 percent). Understanding was also influenced by age, with awareness peaking among Gen Xers (35 percent) and reaching the lowest point among millennials (24 percent).
As part of its ongoing effort to raise awareness for 529 plans and college savings techniques, 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 savings tool. Since May 29 falls on a Sunday this year, Edward Jones branches will be hosting events in their communities earlier in the week to remind families about the importance of setting education savings goals. Families are encouraged to visit their local branches to learn more about planning for their children's educational future.
The Value of a College Degree
The survey found that a majority of Americans (88 percent) believe a college degree is important for future employment, with almost half (49 percent) of Americans agreeing that you cannot get a job without a college degree. Baby Boomers were the most likely to echo this sentiment (53 percent), compared to their millennial counterparts (43 percent) who believe the same.
"While most Americans agree that a college education is an important investment, they are not taking advantage of the tools that help make the most of their savings," added Danae Domian, Principal at Edward Jones. "As the cost of college continues to increase, it's especially critical that you do your homework on the investment options available to you. The 529 college savings plan can be a great fit for many families as they prepare for their children's future."
Employers are Taking Notice
Concerns about affording the cost of college remain top of mind for most Americans, and in response, some companies are beginning to add 529 plan aid to workplace-benefits packages. When asked how likely they would be to participate in such a benefit, the majority (86 percent) of respondents answered in the affirmative. In fact, nearly all (93 percent) respondents with children ages 13-17 indicated that they would likely participate if such a benefit was offered by their employer.
About Edward Jones
Edward Jones, a FORTUNE 500 firm, 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 13,000-plus financial advisors work directly with nearly 7 million clients. Edward Jones, which ranked No. 10 on FORTUNE magazine's "100 Best Companies to Work For 2016," 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. Visit us on Facebook, Twitter, LinkedIn, or YouTube for more information. Member SIPC.
Survey was conducted by ORC International's CARAVAN Omnibus Services and was based on 1,006 landline and cell phone interviews of U.S. adults conducted April 28-May 1, 2016. The margin of error was +/-3%.
Withdrawals used for expenses other than qualified education expenses may be subject to federal and state taxes, plus a 10% penalty. There may be state tax incentives available to in-state residents who invest in their home state's 529 plan. Student and parental assets and income are considered when applying for financial aid. Generally, a 529 plan is considered an asset of the parent, which may be an advantage over saving in the student's name. Make sure you discuss the potential financial aid impacts with a financial aid professional. Tax issues for 529 plans can be complex. Please consult your tax advisor about your situation. Edward Jones, its financial advisors and employees cannot provide tax or legal advice.