80% of parents are saving regularly for their children’s college, Rich Polimeni tells Kids & Money columnist Steve Rosen for

October 19, 2018

Checking the health of 529 college savings plans

Kids & Money

If you’ve opened a 529 college savings account, you may wonder if it’s looking good. You look at your account balance and think, “How do I stack up? Am I on target?”

Or maybe you’re thinking about opening a 529, but you’re hesitant because you don’t understand how they work and how much money can be put in them. Or maybe you’ve heard that you can get federal tax benefits, but you’re unsure whether your state offers income tax deductions or credits.

Where can you get the information?

Fresh data from surveys taken by several college savings organizations offer some measuring sticks on the popular 529 accounts, which are offered by nearly every state and provide tax-free benefits on distributions used for qualified education expenses.

First, some numbers:

*Total investments in 529 plans reached a record $328.98 billion at mid-2018, according to a survey by the College Savings Plans Network (

*About 300,000 new 529 accounts were opened in the first half of 2018, bringing the total to 13.6 million accounts, the savings organization said.

*The average amount of money in a 529 increased to a record $24,153, as of June 30, the network said.

*Nearly 80 percent of parents are savings regularly for their children’s college education, with more than half saving monthly, 19 percent saving quarterly, and 8 percent annually, according to the College Savings Foundation survey of about 800 families


*About 42 percent of parents said they are savings more than they were a year ago, up from 38 percent in 2017, the foundation said.

So all is well?

Maybe not. Despite the savings growth, the foundation noted that nearly two-thirds of the parents surveyed plan to borrow to pay for their children’s college, with 62 percent relying on education loans and 18 percent tapping credit cards or a line of credit.

Perhaps they started late, right? Or, they underestimated how much they’d need to cover the college tab.Whatever the reason, many parents still find the need to take on debt. One other data point deserves attention: The number of families using 529 plans to save for college.

According to the College Savings Foundation survey, 50 percent of the respondents have a 529 in place. The accounts, launched about 20 years ago, are “coming of age,” said Richard Polimeni, chairman of the foundation.

He pointed out that when the 529s were introduced, Baby Boomers’ oldest children were close to college age and therefore saving for college in these accounts were not a priority. “Now we have a new generation that has grown up with a savings account specifically designated for college,” Polimeni said.

But research from, an organization devoted to providing consumer resources on 529 plans, showed that less than 18 percent of children under age 18 have 529 plans.

Part of the problem is a lack of awareness of 529s. Savingforcollege found that less than a third of parents surveyed know about the accounts.

“With retirement plans, you learn about a 401(k) and other qualified retirement plans when you meet with human resources after being hired,” said Mark Kantrowitz, the website’s publisher and vice president of research. “But when you have a baby, the hospital doesn’t give you a guidebook about raising a baby and saving for college. You’re lucky if someone tells you about 529 plans.” That’s why Savingforcollege has started a campaign to inform parents about 529s. Information is available at

While surveys are snapshots in time and should be taken with some skepticism, it’s clear that many families are struggling to save for college or are not aware of one of the best ways to get started.

As Kantrowitz said, just having a 529 plan “sets up an expectation that the child will go to college, which increases the odds that the child will enroll in and graduate from college.”

(Questions, comments, column ideas? Send an email to