Most Americans Don’t Understand This Basic Savings Tool

Analyzing the top news stories across the web
May 16 2014 3:54 PM

Most Americans Don’t Understand This Basic Savings Tool

457071519-gate-sits-locked-on-quincy-street-at-harvard-university
Very high rent

Photo by Darren McCollester/Getty Images

This post originally appeared on Business Insider.

Seven in 10 Americans can't identify a 529 college savings account, according to a recent survey by financial services firm Edward Jones.

Advertisement

In case you're among the 70 percent that has no idea what a 529 is or does, it's a tax-advantaged, state-sponsored college investment account open to anyone. In fact, we recently outlined the advantages of using one, including the fact that it can store a staggering amount of money, be opened and contributed to by family and friends alike, and that contributors can take a tax deduction.

529s are so flexible that they're considered the go-to resource for most families saving for college.

"When we see that the cost of college continues to rise, yet Americans fail to recognize one of the most advantageous vehicles to address that need, it's troubling," says Greg Dosmann, a principal with Edward Jones. "We've intentionally asked the same question three years in a row, and it's disappointing to see the numbers really haven't changed much."

That's why Edward Jones has named May 29 Save for Education Day. In a push to get the word out about these accounts, the firm dons college gear and hosts events across the country, including at the St. Louis Cardinals game. (Last year, Dosmann threw out the first pitch.)

"The average student loan debt is somewhere around $30,000. If you do the math, it wouldn't have taken a lot of savings to erase that over a child's 18-year lifetime," Dosmann explains. "If we got to the point where every time a child was born, we said to the parents 'Go set up a 529,' it would virtually erase the student loan problem in this country."

Libby Kane is the personal finance editor at Business Insider.