For example, while preservation of principal looms largest as a college savings program among consumers – cited by 72% of respondents – just 13% say their state’s 529 plan offers an insured portfolio, according to a survey, conducted for Alliance Capital by Harris Interactive.
Of course, that may not matter much, since over half (51%) of respondents say they are looking for the “right” 529 program, regardless of whether their state offers it or not. In fact, while 70% said that state tax deductions were an attractive feature, only one in ten said it makes sense to invest in their in-state option.
The fifth annual Alliance Capital College Financial Preparedness Poll also found that that two-thirds (66%) of parents and grandparents, regardless of age, income or gender, are very (29%) or somewhat (37%) concerned about the continued market volatility and its effect on their college savings.
The poll also found that while respondents expect to save the same amount ($20,000), people who have not already begun to save plan to begin investing in such programs now plan to do so beginning when the child is around four years old, significantly sooner than the age 11 cited just a year ago.
Other desired features were the ability to:
70% – develop a custom portfolio of mutual funds
69% – select aged-based portfolios that adjust automatically as the child grows
61% – choose from among more than 10 investment options (61%).
As for how to buy in to the programs, in addition to the payroll deduction option, 62% wanted to be able to invest directly through a financial advisor, while a slightly higher 71% want the option of purchasing a plan directly.
The authors of the survey noted that 75% of investors still lack a basic knowledge of 529 plans, while just 23% they are somewhat or very familiar with 529 plans, compared with 18% in 2001.