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 529 accounts are by no means "new" savings vehicles.

We continue to see an impressive growth trajectory, with more than 600,000 new 529 account enrollments in 2021.




new 529 account enrollments





average initial contribution amount for a new account



total 529 accounts on our platform

529 savings show continued growth

The overall average 529 account balance has grown by 26% over the past five years. This overall average balance also increased by more than $2,000 in 2021.


overall average 529 account balance in 2021


increase in average 529 account balance since 2017

529 Average Account Balances

How much progress have 529 savers made?

529 balances increased year-over-year across all account owner age ranges. Not surprisingly, savers ages 45 to 54 who have had a longer time horizon to save than their younger counterparts and likely have beneficiaries approaching college age had the highest overall average balance at $40,838.

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1Illustration assumes an annual rate of return on investment of 5%, that no funds are withdrawn during the time period specified, and that the taxpayer is in the 30% federal income tax bracket for all options at the time of contributions and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

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 recurring bank contributions

Most savers "set and forget" their automatic investments

49% of 529 account owners that had opted to use automatic investment methods in 2020 made no changes to these regular contribution amounts in 2021. This suggests that about half 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.

Saving early better prepares families to cover education costs

54% of all 529 accounts on our platform were opened when the beneficiary was 5 years old or younger, with 40% of accounts opened when the child was just 2 years old or younger.

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

Why start early?

Getting an early start is important for families looking to maximize their savings. For families with a beneficiary ages 16 and 17, those that began saving in a 529 account when the child was age 5 or under have 70% more in savings than families who didn't start saving until the child was 11 or older.


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

60% of the accounts in Ascensus-administered 529 plans are invested in age-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.

31% of accounts are invested in individual portfolios, managing investment reallocation strategy on their own. However, our data suggest that very few of these investors actively managed their allocations and made fund exchanges in the 2020 year.

Interestingly, 9% of 529 account owners on our platform are invested in both age-based and individual portfolios. This suggests that these investors might have some confusion about the intended use of an age-based portfolio and the fact that it's intended to capture all savings and reallocate them appropriately as the beneficiary ages.

of 529 accounts invested only in age-based portfolios

of 529 accounts invested only in individual portfolios

of 529 accounts invested in both age-based and individual portfolios

Every dollar helps

Many education savers ask the same question: how much do I need to save regularly to make an impact? Our data suggest that nearly three-quarters, or 70%, of 529 account owners save on average $300 or less per month. And, nearly half save on average just $100 or less per month.

These trends support 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 and repaid in the form of student loans.

The value of saving versus borrowing

Saving to pay for college costs less than borrowing.

By saving, your money accumulates earnings along the way and you don’t have interest to pay back. This can reduce loan obligations in the future.

• Contributing $25,674 to a 529 over time can grow tax free by $20,946 to an estimated $46,620.
• Borrowing this same $46,620 amount at time of college can cost $55,925 in loan repayment, which includes over $9,000 in interest.
• Comparatively, $25,674 in contributions over the years before college can provide similar funding for college as paying back $55,925 after college.

To learn more about saving for college see Source: Assumes an interest rate of 3.73% 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 and 17 as a percentage of the cost of attending four different types of higher education institutions. On average, these accounts could cover 51% of tuition, fees, and room and board of a four-year, in-state public university, and 23% of tuition, fees, and room and board of a four-year private university.*


average balance for beneficiaries ages 16-17 in 2021

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

*Trends in College Pricing and Student Aid 2021. The College Board. February 2022.

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 2021


% year-over-year

increase in total dollars gifted to Ascensus 529 plans from 2020-2021


% 5-year growth

in total dollars gifted to Ascensus 529 plans

Enhanced features make 529 gifting even simpler

Since its launch in 2007, our Ugift program has offered 529 account owners a unique opportunity to crowdsource 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. Over the course of 2021, we saw more than 25,000 new recurring gifts established.


total 2021 Ugift contributions


median gift amount


gift-giver profiles established


recurring gifts established


The app has seen consistent monthly growth since it was launched in January of 2021.

As of June 2022, nearly 250,000 account owners access their 529 accounts through the READYSAVE 529 mobile app.

As of 12/31/2021

Mobile activity accounts for more than a third of monthly account traffic.

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