83% OF AMERICANS SAY THEY CANNOT AFFORD THE COST OF COLLEGE

  

Two thirds of Americans still don’t know what a 529 plan is, according to the annual 529 Plan Awareness Survey from financial services firm Edward Jones. In its fourth year monitoring college savings awareness, the survey found that only 34% of Americans could correctly identify a 529 plan as a college savings tool from among four potential options, up slightly from 30% in 2014 but down compared to the inaugural 2012 survey of 37%. These college savings plans were first offered to Americans in 1996.

“Despite headlines focused on the increasingly high costs of college, we still see a significant number of Americans who aren’t aware of one of the most important long-term savings vehicles that can help minimize the impact that the cost of education has on families” said Billy Starnes, one of four Edward Jones Financial Advisors in Brenham. “Demographically, people are living long and having children later in life, narrowing the time between a child’s college bills and his or her parents’ retirement age. This, coupled with the fact that the cost of college is increasing at a much higher rate than inflation, means that many are grappling with how to stay on track to meet savings goals”.

Awareness varied by several factors including household income, size and number of children. Respondents with a household income of $100,000 or more were significantly more likely to correctly identify 529 plans (59%), than those with less than $35,000 (25%). Similarly, awareness also increased depending on household size and number of children. Americans with a household of three or more people reflected more awareness (40%) than those with a household of two people (30%). Surprisingly, respondents with children ages 13-17 years were less likely to correctly identify the college savings plan than those with children under the age of 13 (35% vs. 41%).

The High Cost of College:

The survey also asked respondents to indicate whether or not they believe they can afford the full cost of a college for themselves or a family member. While male respondents were twice as likely to indicate “yes” than their female counterparts (21% vs. 11%), overwhelmingly, Americans say they simply can’t afford the cost (83%). Interestingly, even higher income levels did little to help, with just 37% of the highest earning respondents (those making $100,000 a year or more in a household income) say they could afford the cost.

“While the cost continues to be a major concern, Americans still recognize the value of a college education, so finding ways to manage those costs becomes paramount in the process” said Starnes. “We need to remind them of the wide array of strategies that exist and help them put their goals into action through designing a plan that utilizes appropriate tools in support of their savings goals”.

story courtesy of: Edward Jones