Friday, May 30, 2014
In a new survey by Edward Jones, 70 percent of respondents had never heard of a 529 plan. While many can understand, others may be surprised to learn the rest of the nation has not discovered the magic of compound interest that comes with a 529 college savings plan. Introduced in 1996, 529s are savings plans where earnings are tax-free as long as they are used for college expenses.
May 29 is designated “529 Day” and aimed at raising awareness about the importance of saving for university and the many benefits of a 529 plan. “Parents hear about high costs of higher education and they freeze. They’re not sure what to do, so they don’t do anything,” says Mary Anne Busse, a spokesperson for the College Savings Plan Network, a trade group for individual states’ 529 plans.
This year efforts are focused around giving away money to help seed college savings plans amounts from $529 to $5,290. There are other giveaways as well, such as ice cream, zoo and museum admissions, and piggy banks. Also aimed at parents of young children is a new book on college savings, “Everybody Freaks Out! (But it’s going to be okay,” which is sponsored by The Education Trust of Alaska and the College Savings Plans of Maryland, with support from T. Rowe Price. It is a color story book about parents who get scared when they see how much college will cost. This book is aimed at getting parents to sign up for a 529 plan at the birth of their child. T. Rowe Price’s senior financial planner, Stuart Ritter, says, “We get four times as many accounts open at birth than any other age.”
Although there are no outright incentives, there is an online and radio campaign for private 529 plans centered around 529 day. “What we consider the incentive is that tuition rates are about to increase.” However, if you missed out, you will get another shot in September during National College Savings Month.
See Beth Pinsker, What Would Entice You To Sign Up For A 529 Plan? Reuters, May 28, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.