Saturday is more than just May 29th. It’s National 529 Day, a celebration of the tax-advantaged accounts that can be used to pay for qualified education costs, including college, K-12, and apprenticeship programs.
State and private 529 plans across the country are looking to boost interest and participation in their 529 savings programs this month with new incentives, sweepstakes, contests, virtual events, and social media activities. Many plans have created fun and innovative ways to continue to highlight the importance of saving for college.
Predictably, the amount of many of the incentives is $529, matching not only the name of the savings plans but the awareness campaign date—annually the 29th day of the 5th month of the year.
The College Savings Plans Network has a state-by-state list of 529 Day Promotions from 20 different states.
Saving for College also compiled a list of 529 Day state/plan promotions taking place in and around the month of May, featuring 15 states.
And UPromise, a free loyalty program that helps families save for their child’s college education, also has information on incentives from 26 states and created a catchy new infographic, titled “All About 529 Plans.”
As for those state programs, here’s a look at what California is offering, for example.
ScholarShare 529—California’s official college savings plan—is offering a $50 bonus for families who open a new account with $50 or more between May 24 and May 31, and set up automatic monthly contributions of $25 or more for six months.
“There is no better time to save for college, and this year’s ScholarShare 529 Day offer provides a great foundation to get started,” said California State Treasurer Fiona Ma. “As thousands of families continue to save for college, we encourage all Californians to join them by taking advantage of this offer to invest in their children’s future.”
ScholarShare 529 recently eclipsed $12 billion in assets under management, and posted record growth in 2020 despite the pandemic. The positive growth is continuing in 2021, with the number of new accounts opened in the first quarter up 9% compared to the first quarter of 2020, and contributions up nearly 14% during the same timeframe.
529 Plans do have an awareness problem
Despite the annual “529 Day” awareness efforts, a majority of Americans still don’t know what they are, according to the latest Edward Jones 529 Awareness Survey. In fact, only 36% of Americans can correctly identify a 529 plan; a slight drop from 37% in the inaugural 2012 survey.
For advisors, this leaves a gap to fill as among parents, saving for their child’s education (30%) is the third most popular life event they’re saving for, following retirement (49%) and emergency cash (44%). Additional findings from the 529 Plan Awareness Survey include:
- 40% of American parents are saving for college by utilizing a personal savings account, 23% relying on scholarships, and 22% employing federal or state financial aid.
- 67% of Americans admit that they were not aware of the features and potential tax benefits of 529 plans and 65% unaware of their uses beyond higher education.
- Of respondents who do not feel that they are saving enough for future education expenses, one quarter (24%) said they would feel better if a financial advisor could help guide their financial decisions.
From 2012 to 2021, student loan debt grew 70% to $1.7 trillion, according to the Federal Reserve’s estimates. During the same period, the average cost of attending a private college grew 17% to $37,650. Despite the increase in these figures, surprisingly the Edward Jones survey did not indicate an uptick in the use of the tax-advantaged 529 savings plans, with only one-fifth of parents in the U.S. (20%) reporting they have saved or are planning to save for theirs or their children’s education using a 529 plan.
“With the cost of college continuing to rise, having the potential growth and tax benefits of a 529 make these plans crucial—and complementary—to the additional strategies Americans are using to save for education,” said Steve Rueschhoff, principal at Edward Jones. “While there are a lot of unknowns for parents of college-bound students, like the potential for scholarships, the permanence of hybrid online/in-person education, and any policies offering student debt forgiveness, it’s prudent to save for education to help create certainty and confidence.”
SEE ALSO:
- 3 Tips to Make the Most of an Atypical ‘529 Day’
- The Massive Student Debt Problem and What to Do About It
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
