Changing tides for 529 market and its investors

The tax advantages and provisions associated with 529 accounts have continued to evolve since their introduction in 1996, but they are by no means a "new" savings vehicle.

Yet we continue to see an impressive growth trajectory, with over 350,000 new 529 account enrollments in 2017.




new 529 account enrollments





average initial contribution amount



total 529 accounts on our platform

529 accounts mature, balances build for savers

The overall average 529 account balance has grown by 20% over the past five years. This upward trend is likely due to a number of market factors, as well as a shift in savings habits.

$22,886 overall average 529 account balance in 2017

20% increase in average 529 account balance since 2013

529 Average Account Balances

Download the complete Inside America Savings Plans report


How much progress have 529 savers made?

Account owners ages 45-54 have the highest average account balance at $32,399. Although savers ages 25-34 represent only 7% of account owners, their average account balances have grown 14% from 2016-2017, representing the highest growth rate among all age groups.

Strong market performance likely contributed to notable year-over-year growth in average account balances across all age groups.

Average 529 Account Balance

The tax-deferred difference1

Most are aware all 529 plans are "tax-advantaged," but what do those tax benefits really mean for savers?

All 529 plans benefit from tax-deferred growth, meaning that account balances can grow free of federal and state taxes. Over the long term, this tax-deferred growth can make a significant difference in overall savings. In this illustration, the difference totals more than $6,000 over the course of 18 years.


monthly contribution


market return


1Illustration assumes an annual rate of return on investment of 5%, that no funds are withdrawn during the time period specified, and that the taxpayer is in the 30% federal income tax bracket for all options at the time of contributions and distribution. This hypothetical is for illustrative purposes only.

Making saving more simple

With many competing financial responsibilities, savers can find it difficult to dedicate money to education savings. Automatic contribution options are a convenient way for savers to regularly contribute to their 529 accounts in a way that's simple to manage.



of account owners making payroll direct deposit



of account owners making recurring bank contributions

Read More

Most savers "set and forget" their automatic investments

At the end of 2017, 69% of 529 account owners that had opted to use automatic investment methods had made no changes to these regular contribution amounts. This suggests that the majority of automatic 529 investors tend to "set and forget" these savings.

As we've seen for retirement savers, optional automatic increase features can boost 529 plan participation and help improve long-term outcomes.

Interestingly, for all 529 savers that have leveraged automatic contribution methods, over 10% contributed additional dollars to their 529 accounts on top of these auto investments in the 2017 year.

Saving early better prepares families to cover education costs

53% of all 529 accounts on our platform were opened when the beneficiary was 5 years old or younger, with 38% of accounts opened when the child was just 2 years old or younger.

This means that most 529 savers actually have the foresight to get started before their children even begin their first years of school.

Up to 2 years
3-5 years
Read More

Why start early?

Getting an early start is important for families looking to maximize their savings. For families with a beneficiary ages 16 to 17, those that began saving in a 529 account when the child was age 5 or under have 71% more in savings than families who did not start saving until the child was 11 or older.

Account Balances for Beneficiaries Ages 16-17


Average balance for accounts opened when beneficiary was under 1 to 5 years old


Average balance for accounts opened when beneficiary was under 6 to 10 years old


Average balance for accounts opened when beneficiary was 11+ years old

Age-based options help with asset allocation

Over half of the accounts in Ascensus-administered 529 plans are invested in aged-based portfolios. This suggests that savers are more comfortable taking a guided approach to 529 investing, opting for help in reallocating savings to a more conservative path over time.

44% of accounts are invested in individual portfolios, managing investment reallocation strategy on their own. However, our data suggests that very few of these investors actively managed their allocations and made fund exchanges in the 2017 year.

of 529 assets invested in age-based portfolios

of 529 assets invested in individual portfolios

of all account owners changed their investment allocation in 2017

Every dollar helps

The median initial 529 account contribution in 2017 was $1,000. The contributions that follow this initial deposit tend to be smaller, with 60% of these contributions totaling $100 or less.

This trend supports the idea that savers don’t have to take an "all or nothing" approach to saving for education. Every dollar saved today is one less that needs to be borrowed or repaid in the form of student loan debt.

Read More

The value of saving versus borrowing

Saving even small amounts in a 529 account over time can help spare families and students from major loan payments in the future. The average account balance for beneficiaries ages 16 to 17 at the end of 2017 was $35,389. How much would it cost a student to borrow this same amount for education?

For that loan amount, the student would be required to pay $8,100 in interest over ten years. That’s equal to 23% of the original loan amount. In the long run, saving proves to be a much more cost-effective strategy than borrowing.

Source:; Assumes an interest rate of 4.29% throughout the life of the loan and a ten-year repayment period. This hypothetical example is for illustrative purposes only and assumes no withdrawals made during the period shown. It does not represent an actual investment in any particular 529 plan and does not reflect the effect of fees and expenses or any taxes payable upon withdrawal. Your actual investment return may be higher or lower than that shown. The loan repayment terms are also hypothetical. Loan rates and monthly payments may be higher or lower than shown.

How much of a college education do average 529 balances fund?

To understand how 529 savings help to pay for an education, we analyzed average account balances for beneficiaries ages 16 through 17 as a percentage of the cost of attending four different types of higher education institutions. On average, these accounts could cover over 40% of tuition, fees, and room and board of a four-year, in-state public university, and nearly a fifth of tuition, fees, and room and board of a four-year private university.*


average balance for beneficiaries ages 16-17

of two years at a community college + two years at an in-state, public university*
of a four-year education at an in-state, public university*
of a four-year education at an out-of-state, public university*
of a four-year education at a non-profit, private university*

% of Tuition Covered by Average Account Balance for Beneficiaries Ages 16-17

*The College Board, Trends in College Pricing 2017, October 2017.

Savings are the gift that keep on giving

Now more than ever, families understand the importance of saving for education. With Ugift®, a convenient and free-to-use service, family and friends can gift contributions to a child’s 529 account.




contributed to education savings through Ugift in 2017


% year-over-year

increase in total dollars gifted to Ascensus 529 plans from 2016-2017


% 5-year growth

of total Ugift contributions

Enhanced features make 529 gifting even simpler

Since its launch in 2007, our Ugift program has offered 529 account owners a unique opportunity to crowd source their savings efforts.

Ugift now allows users to set up a Gift Giver profile, which allows them to save their banking information, view their gift history, and schedule recurring gifts. Since the introduction of this feature in December 2017, we’ve seen 75% of recurring gift givers contributing on a monthly basis.




total 2017 Ugift contributions



median gift amount



gift-giver profiles within 30 days of Gift Giver launch




recurring gifts established within 30 days of Gift Giver launch

Inside America's ABLE Plan

Read More