The annual 529 Plan Awareness Survey from financial services firm Edward Jones has found that 66% of Americans don't know much about 529 plans and how they apply to saving for college costs.
Now in its fourth year of monitoring college savings awareness, the Edward Jones questionnaire showed that only 34% of Americans could identify a 529 plan as a college savings tool from among four potential options, which is up from 30% in 2014.
However, in 2012 when the survey was given for the first time, 37% knew about 529 plans. The college savings plans were first offered in the US in 1996.
The report says that paying for college is increasingly difficult and that families need to know what their options are:
"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 Steve Seifert, Principal at Edward Jones.
"Demographically, people are living longer 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."
Several factors came into play when the levels of awareness of this tool were surveyed: household income, household size, and number of children. Participants with a household income of $100.000 or more were more likely to identify 529 plans (58%). Households with a less than $35,000 in income did not recognize 529 plans as often (25%).
Americans with three or more in the household had greater awareness (40%) than did households made up of two people (30%). Respondents with children aged 13 to 17 years were less likely to identify the tool than families with children under the age of 13 (35% vs. 41%, respectively).
An additional question on the survey asked participants to share whether they believed they could afford the full cost of college tuition and fees for themselves or a family member. White males taking the survey were twice as likely to state they could afford the cost than were their female counterparts (21% compared to 11% of women).
Americans, in general, do not believe that they can afford the cost of college (83%). Only 37% of those making $100,000 annually or more in household income said they could handle the cost of higher education.
"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," added Seifert. "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 the appropriate tools in support of their savings goals."
The Edward Jones survey was conducted by ORC International's Omnibus Services and was based on 1,008 landline and cell phone interviews of US adults and was conducted April 23-26, 2015. Edward Jones provides financial services for individual investors in the US and is headquartered in St. Louis.