529 College Savings Plan Assets Increased To $20 Billion Last Year

However, the top 10 providers control 82% of the assets. Cerulli figures show that the other 25 providers split only 18% of the assets.

The Cerulli researchers warn that providers are worried about the profitability of 529 plans. The average 529 savings plan account has a balance of $6,457, which, in most cases, falls short of covering account administrative and operational costs, the researchers write.

The Cerulli researchers see plenty of room for growth: Only 4.3% of U.S. children under 18 had 529 accounts at the end of 2002, and overall awareness of the program remains low.

Cerulli is projecting 40% compounded annual growth in 529 plan assets from now until 2008.

However, the top programs are likely to attract most of the new assets, and the low account balances could keep many providers from making profits, the researchers write.

Reproduced from National Underwriter Edition, May 12, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.