The total number of 529 accounts increased almost 4 percent over the past 12 months
American families have an unprecedented $252.3 billion invested in 529 college savings plans, according to a new report published by the College Savings Plans Network. This represents a growth in assets of $5.3 billion.
The total number of 529 accounts increased almost 4 percent over the past 12 months, from 12.1 million in December 2014 to 12.54 million in December 2015. Contributions last year grew by $25 billion. As of the end of last year, the average balance in a 529 college savings plan account was $20,190, down 1.4 percent from the previous year, which, the report states, is attributable to the performance of the financial markets during the second half of 2015.
Education is second only to hard work as the factor to which Affluent households are most likely to attribute their financial success, Spectrem Group research finds. More than eight-in-10 indicate they believe a college education is necessary to succeed in today’s workplace. The Bureau of Labor Statistics reports a 5.9 percent unemployment rate for American high school graduates, but only 2.6 percent for those with at least a bachelor’s degree.
But saving for college is a challenge, especially among non-Millionaires, 38 percent of whom indicated it was a primary financial concern. Published in-state tuition and fees (including room and board) at public four-year institutions averaged $198.548 in 2015-205 according to College Board data cited in the College Savings Plans Network report.
A 529 college savings plan, named after Section 529 of the Internal Revenue Code of 1986, is a tax-advantaged investment plan created to encourage saving for the college education of a designated beneficiary or any other individual investing for their own higher education. Earnings from the funds are not taxed as long as those funds are used to pay for college expenses. Any family member, including aunts, uncles and grandparents, can contribute to the accounts.
Investment in a 529 college savings plan increases with net worth, according to Spectrem Group research. Eleven percent of non-millionaire households with a net worth of at least $100,000 (not including primary residence) are invested in a 529 college savings plan, compared with 19 percent of Millionaires with a net worth up to $5 million, and one-fourth of Ultra High Net Worth households with a net worth between $5 million and $25 million, according to the Spectrem Group report, Asset Allocation, Portfolios and Primary Providers.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.