Wednesday is May 29 … 5/29 … and the folks behind 529 college savings plans are milking the connection for all it’s worth.
The College Savings Plans Network (CSPN) and various states have declared May 29 National “529 College Savings Day” in recognition of the the tax-advantaged investment plans named for Section 529 of the tax code and designed specifically to save for higher education expenses. Americans have invested more than $179 billion in the plans.
Yet, even with all the focus on college costs, just one in three Americans knows what 529 plans are, according to a recent survey by the financial services firm Edward Jones. Awareness is higher in high-cost New England: 45% of survey respondents in the Northeast know what 529s are, while just 26% in the South and West do.
The CSPN, which bills itself as “the nation’s leading objective source about Section 529 College Savings Plans and Prepaid Tuition Plans” released this infographic summarizing state involvement in the plans.
Among New England examples, the Harold Alfond College Challenge gives a $500 grant to every baby born in Maine as long as they are enrolled in Maine’s 529: the NextGen College Investing Plan Account.
For financial aid purposes, 529 plans, are considered to be assets of the account owner. If the account owner is the parent of a student, on average, about 5.6% of the value of the account is considered in determining the student’s Expected Family Contributions (EFC)—the amount the family of the beneficiary is expected to pay toward the beneficiary’s higher ed. If the assets are in the name of the student, a more bruising 20% of the value of the assets is counted toward the EFC.