LEXINGTON, Ky. (5/27/14)--May 29 marks 529 College Savings Day, an opportunity to raise awareness about the importance of saving for college. Nationally, individual states have planned activities and promotions to educate families and friends of future college students about the best ways to save (College Savings Plan Network May 21).
The College Savings Plans Network (CSPN), a source for information about Section 529 college savings and prepaid tuition plans, has released an infographic map compiling all of the state activities--educational programs, discount admission to zoos, museums and sporting events and waived enrollment fees.
In a May 20 column, Washington Post columnist Michelle Singletary wrote that in a 529 savings plan, you invest as you would in a workplace 401(k) or other investment. Returns are based on how your portfolio performs through the years. Most 529 savings plans offer age-based options--the investments become more conservative as the beneficiary gets closer to college age.
All 50 states and the District of Columbia offer at least one 529 plan named for Section 529 of the Internal Revenue Code. Although the 529s are state-sponsored, you can invest in any of them regardless of where you live. Many states offer a tax deduction for residents who use their state's plan.
Despite 529 plan benefits, many people aren't aware of this college-savings vehicle. For the past three years, the financial firm Edward Jones has commissioned a survey to gauge what Americans know about the plans.
In 2012, only 37% of respondents correctly identified a 529 plan from among four options. Others thought it was a retirement account, a form of life insurance, or a low-cost health-care plan. Only 30% of participants overall could identify a 529 plan.
Among those with household income between $50,000 and $75,000, awareness was marginally better at 32%. Awareness increased when income increased, but still wasn't high: Forty-two percent of households with incomes between $75,000 and $100,000 could identify a 529 plan, and 48% making more than $100,000 answered correctly.
Hence the importance of a day to raise awareness. Betty Lochner, chair of the CSPN, said, "Our goal for 529 Day is to raise awareness throughout the country about 529 plans, so that future generations of students may have better financial access to higher education. Anyone with a child in their life should make 529 Day count by checking our infographic to learn more about their state's activities."
James DiUlio, director of Edvest, the Wisconsin 529 college savings program, said, "Being able to reach your full potential and love what you do for a living is part of the American dream. No student should have to pass up the opportunity of college, professional school, technical school, or graduate school because they can't afford to go."
For related information, read the newly revised Turning Point, "Paying for Your Child's Higher Education," in the Home & Family Finance Resource Center.