LEXINGTON, Ky. (4/1/16)--With the cost of higher education rising at an alarming rate, more than 400,000 Americans opened new college savings accounts in the last year, according to a new report from the College Savings Plans Network.
In December, the total number of 529 college savings plans in America reached 12.5 million, an increase from 12.1 million the year before.
Overall, contributions grew by $25 billion, and more than 55% of all 529 accounts received contributions in 2015, according to the report.
A 529 plan is a tax-advantaged investment plan designed to encourage saving for the future qualified higher education expenses of a designated beneficiary, which could be one’s child or grandchild, but could also be any other individual (including oneself for adults investing for their own higher education). The plans are named after Section 529 of the Internal Revenue Code of 1986.
The plan-level data collected shows that 529 plan assets reached record amounts in 2015 with $253.2 billion in assets under management. This is a 2.1% increase for the time period of Jan. 1 to Dec. 31, 2015. For comparative purposes, the S&P 500 decreased by 0.71%, and the Barclays Capital Aggregate Bond Index increased by 0.55% during the same period.