The Government Accountability Office (GAO) recently released a report regarding 529 Plans. 529 Plans are widely-accessible savings plans that parents can use to contribute to future college expenses. Citing difficulty for many to pay for college (largely due to rapid increases in college costs), the GAO decided to look at the value and use of 529 Plans, which receive certain tax preferences–$1.6 Billion in 2011 alone.
The GAO’s main finding was that, while the “number of 529 plan accounts and the amount invested in them has grown during the past decade,” “a small percentage of U.S. families saved in 529 plans in 2010, and those who did tended to be wealthier than others.”
A list of other highlighted conclusions:
- Less than 3 percent of families saved in a 529 plan or Coverdell Education Savings Account (Coverdell).
- Among those families who considered saving for education a priority, fewer than 1 in 10 had a 529 plan (or Coverdell).
- Families with these accounts had about 25 times the median financial assets of those without.
- They also had about 3 times the median income and the percentage who had college degrees was about twice as high as for families without 529 plans (or Coverdells).
The GAO also highlighted factors that affect 529 Plan Participation.