A new survey on consumer attitudes toward college savings has stoked the ongoing controversy about the need for a national marketing plan to promote Section 529 college savings plans.
Only 39% of those who intend to begin saving for a college down the road are even aware of the existence of 529 plans, and of those, only 9% characterize themselves as familiar with such plans, according to the survey of 500 U.S. households with children under the age of 18 who are expected to attend college.
Additionally, 56% of those planning to save for college were completely unaware of their college- saving options, according to the survey, which was released by OFI Private Investments Inc., a subsidiary of OppenheimerFunds Inc., both of New York.
By contrast, 71% of those already saving for college are aware of the existence of 529 plans, with 56% of those respondents professing familiarity with the product, according to the study, which was conducted by Cogent Research LLC of Cambridge, Mass.
Nonetheless, the low awareness among "future savers" underscores the need for a national marketing campaign, said Bruce Harrington, managing director of Cogent Research.
SPREAD THE WORD
"This study makes clear that awareness is too low, especially among future savers," Mr. Harrington said. "A grassroots approach is key, and you need to use mass media."
Mr. Harrington is a board member of the Washington-based College Savings Foundation, an industry trade group, and until last year served as vice president and director of product management of 529 savings plans at Boston-based MFS Investment Management Inc.
"The survey findings demonstrate the large gap in the awareness levels of the product," agreed Dipti Kachru, marketing manager for college savings plans at OppenheimerFunds. "There should be a national awareness campaign because it's important to get people to know what's available to help them save for college. Financial service firms need to reconsider their approach to educating consumers," he said.
The problem has been figuring out exactly how rival financial firms would cooperate on a national campaign, industry insiders said.
"There are so many issues that have to resolved," said Kevin McMullen, chairman of the College Savings Foundation and corporate law securities counsel for Bloomington, Ill.-based State Farm Insurance Cos. "We still don't know who would pay for a campaign, how it would work, or what the overarching message would be. There's still a lot of work to be done."
LACK OF CONFIDENCE
OppenheimerFunds' survey also revealed that only 14% of those who are planning to start saving for a college education were confident that they will reach their savings goals. Among those already saving for college, 32% were confident that they would reach their goal.
"We developed the [college savings confidence] index to more accurately display the reality gap that exists for families as they struggle to make the dream of a college education a certainty," said Raquel "Rocky" Granahan, vice president and director of 529 college savings plans for OppenheimerFunds.
"Now is the time for state-sponsored 529 plans and financial services firms to reconsider their approach and more aggressively educate the American consumer about 529 plans and other savings options."
To that point, 64% of future savers believed they would never be able to save enough for college, according to the survey, while 46% of current savers came to the same conclusion.
Future savers said the primary reason they were not currently saving for college was that they didn't have enough money to regularly contribute to a college savings program. The second most cited reason was that they hadn't gotten around to it.
Charles Paikert can be reached at [email protected].
