The nation’s 529 savings plans appear to be winning over more parents and other college savers, and at the same time broadening opportunities for financial advisors, according to a new survey.
About 50 percent of U.S. families now have a 529 plan, which is up from 38 percent a year ago, according to the 12th annual State of College Savings Survey by the College Savings Foundation, a non-profit dedicated to promoting the 529 plan industry.
The survey also indicated the college savings market is an area of growth for financial advisors: 48 percent of respondents said they work with a financial advisor, while 74 percent said they would do so if it would help with college savings.
“529 college savings plans have come of age,” said Richard J. Polimeni, chairman of the College Savings Foundation and head of education savings at Merrill Lynch. “We are excited to see that parents are embracing proven strategies for funding their children’s higher education by saving early, often and with the advantage of 529s.”
On a broader level, the survey did find a slight dip in the number of U.S. households saving for college costs.
The survey found that 79 percent of parents across the nation are saving for their children’s college costs, which is down from 83 percent in 2017.
Of those saving, 45 percent have saved more than $25,000 per child and about 75 percent have saved more than $5,000 per child.
The survey also found that 40 percent of parents said their children had considered not going to college, which is up from 28 percent a year ago. Of these parents, about 33 percent said the reason for the hesitancy was that their children didn’t want them to pay large sums for college. Another 17 percent said it was because their children didn’t want student debt.
“Ultimately, the vast majority (85 percent) of parents whose children doubted they’d go to college said the children decided to go after all,” the foundation said in a press release. “This is a significant uptick from last year’s survey, which showed that only 48 percent of the doubting students would go on to higher ed.”
These were some of the other survey findings:
• About 72 percent of parents expect their children to contribute to their higher education costs, either through working (46 percent) or saving (24 percent).
• Having their children live at home during college was the most popular (28 percent) cost-cutting strategy among parents. Starting college studies at a community college (26 percent) and pursuing college-credit courses in high school (14 percent) were among the other strategies.
• About 57 percent of parents plan to borrow money to pay for their children’s college education, with 62 percent planning to use education loans and 18 percent through consumer credit vehicles such as credit cards.
The survey is based on responses from 800 parents of various incomes taken through Survey Monkey.
The College Savings Foundation is a Washington, D.C.-based non-profit organization whose membership includes investment companies, 529 plan providers and other key players in the 529 plan industry.