Target Market Analysis 2023: Trend of Parents Using 529s in 2023 vs 2017-2019

What percentage of parents save for education with 529s?
Exhibit 1

Source: ISS Market Intelligence 529 Industry Analysis 2023

Exhibit 1 reports the segmentation that was used in the survey. Of the respondents polled, 67% were saving for college, while 33% were not as of 2023. The 67% saving for college includes 26% that were 529 plan users (either 529 savings plans or 529 prepaid plans) and 41% that were saving for college but were using something other than a 529 plan (for example, bank accounts). Compared to the prior annual surveys by ISS Market Intelligence in 2017, 2018 and 2019 as reported in Exhibit 2, Exhibit 3, and Exhibit 4, roughly the same percentage of families were saving with 529s. For example, while 26% were saving for education with 529s in 2023, this percentage compares to 24%, 27% and 27% in 2017, 2018 and 2019. Therefore families are saving and saving efficiently with 529s in 2023 in comparison to pre-COVID time period. Therefore, advisors, accountants, and estate planners should note the growing demand and opportunity for 529s and education financial planning, and especially with the expansion of certain types of qualified rollovers from 529s to Roth IRAs effective in 2024. To learn more about how product providers and distributors can help pivot non-savers to savers, savers to 529 users, and 529 users to 529 “powers users”, contact ISS Market Intelligence to learn more about the 529 Industry Analysis 2023.

Exhibit 2

Source: ISS Market Intelligence 529 Industry Analysis 2019

Exhibit 3

Source: ISS Market Intelligence 529 Industry Analysis 2018

Exhibit 4

Source: ISS Market Intelligence 529 Industry Analysis 2017

METHODOLOGY

The “529 Industry Analysis 2023” is ISS Market Intelligence’s 28th study on education financial planning. Its purpose is twofold:

• To provide the education savings industry participants with a qualitative and quantitative analysis of key trends that we believe will drive industry growth over the next five years
• To outline actionable steps to help product providers and distributors restructure their legislative, product, marketing and distribution initiatives to better align with the demands of investors, families, employers and advisers and, therefore, to improve the growth rates of both their plans and the industry

Research sources

This report builds upon 27 prior ISS Market Intelligence college savings studies:

• “529 Distribution Analysis: 2022”
• “529 Industry Analysis: 2022”
• “529 Distribution Analysis: 2021”
• “529 Industry Analysis: 2021”
• “529 Distribution Analysis: 2020”
• “529 Industry Analysis: 2020”
• “529 Distribution Analysis: 2019”
• “529 Industry Analysis: 2019”
• “529 Distribution Analysis: 2018”
• “529 Industry Analysis: 2018”
• “529 Distribution Analysis: 2017”
• “529 Plan Industry Analysis: 2017”
• “529 Plan Distribution: 2016”
• “529 Industry Analysis: 2016”
• “529 Distribution Study (2015)”
• “529 Industry Analysis (2015)”
• “529 Distribution Study (2014)”
• “529 Industry Analysis (2014)”
• “529 Adviser Study (2013)”
• “529 Industry Analysis (2013)”
• “529 Financial Adviser Support, Selection and Distribution Preferences (2012)”
• “529 Industry Analysis (2012)”
• “529 Plans and Distribution Analysis (2011)”
• “529 Adviser Perspectives (2011)”
• “Evaluating the College Savings Market Opportunity (2009)”
• “529 Strategies for Success (2004)”
• “529 Plans: An Investment in Your Company’s Future (2002)”

Consumer survey

The primary goal of this study is to analyze the decision-making and product-selection processes of individuals who were, at the time of our survey, either 529 users, non-529 college savers or non-college savers.

For ISS Market Intelligence’s 529 Industry Analysis 2023, we partnered with a premier business-to-business (B2B) and business-to-consumer (B2C) panel provider and data-collection services company to conduct a proprietary survey of 1,008 consumers in April 2023. This nationally representative sample included U.S. household decision-makers between the ages of 25 and 82 with annual incomes of US$25,000 or more and who were either parents or legal guardians of a child or children under the age of 18.

The survey utilized a choice model method that mapped the target market into three categories: 529 users, non-529 college savers and non-savers. This approach provides firms with strategies on how to convert non-college savers to college savers; college savers to 529 users; and 529 users to 529 “power users”; 529 power users are defined as those savers who are fully funding their accounts to their annual maximum contribution limits, or those who are leveraging multiple sources of contributions, such as friends, family, employers or credit-card rewards programs. Longitudinal analyses are reported for certain data points, as ISS Market Intelligence has conducted similar proprietary consumer surveys with enhancements based on feedback in 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021 and 2022, and has partnered with the same firm to poll consumers. While there were no changes in the demographics of survey-takers in 2023, one change in the 2016 demographics was the inclusion of those with annual incomes of $25,000 or more, as opposed to $30,000 or more in order to improve sample alignment with the U.S. Census. While this broadened out the target market of the survey-takers, we do not project material changes in results due to the inclusion of the category. Therefore, year-over-year trend reporting will be included in charts and tables, and in the written analyses.

Other surveys and interviews

In addition to the consumer surveys described above, ISS Market Intelligence regularly conducts proprietary industry surveys of product providers, financial advisers, broker-dealer (BD) home offices, plan sponsors and parents to give firms a 360-degree view of the current and projected state of the education financial planning industry.

ISS Market Intelligence also regularly conducts primary research in the form of interviews and meetings with industry executives to understand the latest trends in legislative, product development, marketing and distribution of 529 plans and the education financial planning industry.