Are You Familiar with a 529 Plan?

MONEY101-SAVINGANDPAYINGFORCOLLEGE-whatisa529planEdward Jones, a financial services firm, found in a survey that 62% of American has no clue about a 529 plan; they think ‘529 day’ stands for May 29.

Conducted by Opinion Research Corporation, this survey included 1,006 respondents. It highlighted the problem many Americans are currently facing with the ever-increasing costs of higher education. There has been an increase of 8% in tuition costs of 4-year degree from 2010 to 2011, and things are likely to get worse.

The 529 plan is actually a tax advantage savings plan, which is originally designed to support people to prepare for college costs. Since the cost of college education is going up annually, it makes a lot of sense to take advantage of an investment tool like 529plan. Parents and family members can find a number of state-sponsored funds, which can be a bit confusing for them. That’s when they can simplify things and pick the right option by talking to a financial advisor.

Another important thing found in that survey was the direct relation between the awareness of 529 plans and the wealth levels of the respondent. Respondents with an income of $35,000 a year had 27% identification rate. Those earning between $75,000 and $100,000 had a 57% identification rate — and the rate went up to 62% for those earning more than $100,000 annually.

The survey also mentioned that 53% of respondents had a college diploma and they all correctly identified the plans – but the percentage dropped to 29% for respondents who stopped their education at high school. The survey also highlighted the fact that the awareness about 529 plans increased in respondents according to the youngest age of their child.

Some regional difference about the information of the 529 plan has also been highlighted in this survey, as 33% of respondents in the West of the country were aware of the plans but the figure went up to 45% for those in the Northeast.

Every branch of Edward Jones will celebrate ‘Save for Education Day’ on May 29 – so, do take some time out and get to your local branch to find out how to secure your children’s educational future.

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