Many Saving for College Have Never Heard of 529 Plan

Half of respondents who don’t participate in a 529 plan say they have never even heard of the increasingly popular college savings vehicle.

In a recent poll sponsored by higher education lender Sallie Mae, nearly half of those not saving for college do not know how (18%) or are not sure which are the best college savings options (28%).

Among all respondents saving for their childrens’ college expenses, the average amount saved for college in retirement accounts is $6,503, compared to $3,340 in 529 plans.  

The announcement said sixty percent of respondents use at least two savings vehicles, and the number of options utilized increases with income. General savings accounts and CDs are the most popular (50%) followed by investment accounts (34%). Eight percent save through a college savings rewards program.

“The good news is that savers start early and plan to save enough to cover two years at a public university or one year at a private one,” said Albert L. Lord, vice chairman and CEO, Sallie Mae.

Sixty percent of parents have saved for their child’s college education, about the same as last year despite the difficult economic environment, and are on track to save $48,367 on average by the time their child turns 18.

Twenty percent of respondents named college savings as a top saving priority, according to the announcement.