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More Parents Taking Advantage of 529 Savings Plans to Pay for College

By Catherine Groux
Posted August 16, 2012 10:00 AM

A study shows that more parents are saving money for their children's education.
A study shows that more parents are saving money for their children's education.
In May, a survey by financial services firm Edward Jones found that about 62% of Americans do not know what a 529 college savings plan is. This finding was discouraging for many higher education experts, as it indicated that parents and students may not be on track when it comes to saving up for college. However, a new survey by the College Savings Foundation provides more uplifting news.

According to the sixth annual State of College Savings Survey, about 45% of American parents have saved more than $5,000 per child, which is an increase from 40% last year. Roughly one-third of these adults were using 529 savings plans, which are tax-advantaged plans designed to encourage individuals to save up for future college costs.

"Parents are committed to saving for their children's future and are using sound strategies to reach their goals," said Roger Michaud, chair of the College Savings Foundation, in a statement.

Still, while parents are increasingly saving for their children's postsecondary education, students themselves are also working to contribute to the high cost of tuition. The report shows that 69% of parents expect their children to pay for some of their college expenses, up from 62% last year. To do so, about 42% of parents said their children should get a job.

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