FRC: College Savings Will Surge

By staff Writer

January 13, 2010 at 07:00 PM

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The college savings market could double in size over the next 5 years, according to an analyst at Financial Research Corp.

The total college savings market could reach $937 billion by 2014, with $247 billion of the total invested in Section 529 college savings plans, writes Bridget Bearden of FRC, Boston.

Today, the college savings market has about $487 billion in assets, with $88 billion invested in 529 plans.

Other Bearden observations:

Most families with 529 plans have annual household incomes between $75,000 and $150,000.
About 40% of 529 account owners bought directly from state 529 program administrators rather than through advisors.
Prospective 529 plan investors want low costs and low-risk investment options.

Many 529 plan vendors are lowering "all-in" plan costs, and some are responding to an increased fear of risk by adding ultra-conservative investment options, such as bank products, Bearden says.

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