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Total assets in state-sponsored Section 529 college savings plans declined by 19% in inflation-adjusted dollars during calendar year 2008, and by an additional 4% during the first three months of 2009. These assets grew at an average annual rate of 39% from 2001 through 2007. |
Assets in Section 529 college savings plans accumulate tax free and, if used for postsecondary education expenses, can (since 2001) be redeemed tax free. Standard 529 savings plans are tax-preferred investments in mutual funds and other financial assets. Prepaid tuition plans are guaranteed to cover fixed proportions of tuition prices in the future, regardless of price increases. In all states except Alabama, 529 plan investment returns and withdrawals for qualified educational expenses are exempt from state taxation. In many states, there are credits or deductions for 529 contributions.
Note: Information on type of account is not available for years before 1999, although the majority of accounts were prepaid tuition plans.Source: College Savings Plans Network, National Association of State Treasurers. .
Download Excel for this figure. Download Excel for all figures and tables. This figure was prepared in October 2009. - The total number of Section 529 accounts
increased from 10.6 million to 11.2 million
between December 2007 and March 2009.
During this time period, the average value of individual accounts declined 33%, from $13,313 to $8,944 in constant 2009 dollars.More
- Eighty-five percent of the funds in Section 529 accounts are in standard savings accounts, and 15% are in prepaid tuition accounts.
- About 20% of all 529 plan funds ($20 billion in March 2009) are in Virginia. Florida ranked second with $7.2 billion in 529 assets. Wyoming is the only state not offering a 529 plan.
- In March 2009, the largest prepaid tuition plan in the country was in Florida, with $7.1 billion in assets. Texas’s $1.2 billion plan was the second largest.
Also Important
- Ten states currently match a portion of 529 plan contributions for low- or for low- and middle-income families.
- More than 270 private colleges and universities have
joined together in a prepaid tuition plan that carries the
same tax benefits as the state-sponsored 529 plans. The assets in the more than 7,500 accounts in this plan, not included in Figures 16a and 16b, exceeded $135 million as of August 2009.More
(www.independent529plan.org)
- Other forms of savings for education that are granted
special tax status by the federal government include
Series EE and Series I Savings Bonds and Coverdell Education Savings Accounts, as well as IRA withdrawals for education expenses.More
