Know about the 529 plan?You should
It has been recently revealed from the financial firm Edward Jones that far too many Americans have no idea of what the 529 plan is. The 529 plan is a tax college savings plan and can put parents at a huge advantage, but when the firm conducted a survey with Opinion Research Corporation and released the results spanning 1,006 participants, they found that 62% had no clue, despite the fact that 529 is a clue in itself – May 29.
This widespread 529 ignorance is supporting the increasing problem that parents in the US are facing, as costs for higher education continue to rise. For the year spanning 2010-11, tuition fees for four-year degree programs rose by 8%, in a rise that looks set to continue further. The savings made with the 529 planning scheme are thus more important than ever.
The 529 plan is a tax savings plan which provides financial advantages for parents, while encouraging them to prepare for college fees. With fee increases, timely investment through plans such as 529 is becoming a better and better option for those who are looking to hedge the costs for student financing. States provide many different sponsored funds however, and parents are often confused over the best one to choose. The solution here is to get the help of a financial advisor, who can help families find the right plan for them to make future education fees easier to deal with.
The survey finds a direct correlation between earnings and 529 awareness, with 27% of those who knew about 529 earning up to $35,000, while the awareness for higher earners being up to 62%. Further correlation was found between having a degree and knowing about the plan; 29% of people without a college degree knew about it, while 53% of people with a college degree knew about it. There were differences between regions, with the Northeast being the most clued up at 45%, and the West being the least at 33%. The lowest figures came from respondents without parents.
The study does however indicate that awareness is beginning to increase, possibly due to the fact that many parents are now highly aware of the need to plan for college in light of the economy.
Many organizations are helping to increase the awareness of 529, and to promote the benefits of creating educational savings targets. Edward Jones is hosting a Save for Education Day on May 29 next year, and they are encouraging communities to take part, and families to visit their local branch and get informed about educational planning.
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