New Survey by College Savings Plans Network Offers Insights On Who is Saving for College and How The College Savings Plans Network (CSPN)—the nation’s leading objective source about Section 529 College Savings and Prepaid Tuition Plans— today released results of its nationwide 529 investor survey, presenting an analysis of the demographics and saving habits of American 529 plan investors
“From the average age of a beneficiary to preferred contribution practices, this survey provides a unique glimpse into the average 529 investor,” said Hon. Michael L. Fitzgerald, Chair of the College Savings Plans Network and State Treasurer of Iowa.
“CSPN is always looking for new findings to help American families save for college and this survey is a helpful tool in understanding the patterns and trends of 529 plan investors.”
Survey results include:
Starting Early: Results showed that 529 investors are starting to save early. 31 percent of investors opened a 529 account for a beneficiary aged one or younger. The average age of a first beneficiary is five years, while the average age of a second beneficiary is four years, suggesting that investors begin saving earlier when opening a second 529 account.
The Age of Investing: The average age of a 529 investor when first opening an account is 42. The average age of a parent investor is 39 and a grandparent investor is 60.
Educational Value A large percentage of investor respondents received a higher education themselves, with 40 percent having earned a bachelor’s degree and 44 percent having earned a master’s degree or higher.
Investor Relations: The majority of investors are saving for a child (85 percent), while 14 percent are saving for a grandchild and only 1 percent is saving for themselves. More than half of respondents (56 percent) are saving for two of more beneficiaries, while 44 percent are saving for one.
Saving Habits: Investors believe their 529 savings will cover a percentage of college education. According to the findings, 39 percent of investors believe their 529 plan will cover 25-50 percent of a college education; 28 percent believe it will cover 50-75 percent and 17 percent believe it will cover 75-100 percent. In regard to saving techniques, 529 plan investors also save in other ways: 59 percent of respondents save via a traditional savings account and 40 percent invest in a mutual fund. When asked how they contribute to a 529 plan, the majority (71 percent) of investors said they make single contributions while 39 percent have automatic contributions.
Word of Mouth: With many vehicles to spread the word about 529 plans, investors discovered 529 plans mainly through friends and family (31 percent), advertising (29 percent) and news articles (24 percent).
Featured Benefits: Ranked in order of most importance, investors believed tax-free growth was the top feature of 529 plans (78 percent), followed by the ability to segregate savings specifically for higher education (57 percent) and the ease of use of 529 plans (41 percent).
Methodology: The national survey was completed by 4,470 individuals identified as 529 plan savers via Survey Monkey from Aug. 5 to Oct. 16, 2013.