NEW YORK (June 21, 2021) – ISS Market Intelligence (ISS MI), a leading provider of critical data, insight, and workflow solutions to global asset managers, insurance companies, and distributors, today announced the release of this year’s 529 Industry Analysis report. The annual report, now in its 11th year, provides a unique and deep analysis of the state of the 529 industry, as well as on the decision-making and product-selection processes of individual survey respondents regarding college saving choices.
529 industry assets continue to grow, totaling $398.6 billion at the close of 2020, according to ISS Market Intelligence data. When comparing today’s 529 savings plan asset levels to those of 12 years ago ($88.5 billion in 2008), the growth is marked, representing a 450 percent increase, or a 13.4 percent compound annual growth rate (CAGR). The main driver of this growth has been annual net inflows, which remained positive even during the market downturn of 2008 with net inflows of $5.3 billion during that year compared to net inflows in 2020 of $7.7 billion.
While potentially subject to a slowdown in 2020 and 2021 due to COVID-19-related economic and investment market turmoil, growth in accounts and assets continued and is expected to continue over the next 5 years.
“Gross contributions are expected to continue to grow based on the expansion of federal and state tax incentives and qualified expenses, thereby broadening 529 usage to new demographics and deepening of usage amongst current 529 users and new savers accrued during the pandemic,” said Paul Curley, Director of Savings Research for ISS Market Intelligence. “Moreover, this year’s survey shows 529 plan gross sales reaching all-time highs of $34.9 billion, supported by many families taking the opportunity to adjust their budgets, spending habits, and focus on their long-term financial goals including college planning.”
The 94-page report is undergirded by a survey of more than 1,000 U.S. households with children under the age of 18 to help identify the decision-making and product-selection processes of individuals who were at the time of the survey either 529 users, non-529 college savers or non-college savers.
Undertaken between March 18, 2021, and April 12, 2021, the survey shows more families are saving for college and slightly more families are saving with 529s than in 2019. Specifically, the percentage of families saving for college increased from 58.8 percent in 2019 to 62.9 percent in 2021, while the percentage of 529 users increased from 26.5 percent in 2019 to 28.9 percent in 2021. Presented differently, the percentage of college savers using 529 plans increased from 45.0 percent in 2019 to 45.9 percent in 2021, suggesting college savers are becoming more aware of the importance of saving and saving efficiently with 529 plans.
529 plans also appear to be growing in favor for their versatility in helping families retool in the current economic environment through an expanded definition of sanctioned programs. The December SECURE Act, for example, proved timely with its expansion of qualified 529 distributions to include apprenticeships and repayment of student loans. The potential for near-term legislative and regulatory reform may further stimulate interest in and demand for 529 plans.
“Discussions around the CARES Act allowing employers to match employee student loan repayments opens the door to help retain and attract top talent through education financial planning benefits as we enter the post-COVID phase,” said Curley. “We may see employees shifting their mindset on the importance of retooling and saving automatically for goals through their employers, spurring more employers to help current and future employees to save through such plans instead of opting for loans.”
To learn more about the report, please click here.
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About ISS Market Intelligence
A division of Institutional Shareholder Services, ISS Market Intelligence (MI) provides critical data and insight to global asset managers, insurance companies and distributors to help them make informed, strategic decisions to manage and grow their business. Through its industry-leading combination of proprietary and integrated datasets, in-depth global research and reliable executive engagement, ISS MI delivers solutions for market sizing, competitor benchmarking, product strategy and opportunity identification across a wide range of financial products including funds, annuities, insurance, mortgages, and other instruments. The ISS MI group includes the industry-leading data platforms BrightScope, Financial Clarity, Local Market Share, Mortgage Clarity and Simfund, as well as a full collection of global research and analytic services including 529 & ABLE Solutions, Investor Economics, Market Metrics and Plan For Life. For more information about ISS Market Intelligence, please visit issgovernance.com/market-intelligence.
Media Contact:
Subodh Mishra, Managing Director
+301-556-0304
subodh.mishra@issgovernance.com
ISS Market Intelligence Releases Annual 529 Industry Analysis Report
NEW YORK (June 21, 2021) – ISS Market Intelligence (ISS MI), a leading provider of critical data, insight, and workflow solutions to global asset managers, insurance companies, and distributors, today announced the release of this year’s 529 Industry Analysis report. The annual report, now in its 11th year, provides a unique and deep analysis of the state of the 529 industry, as well as on the decision-making and product-selection processes of individual survey respondents regarding college saving choices.
529 industry assets continue to grow, totaling $398.6 billion at the close of 2020, according to ISS Market Intelligence data. When comparing today’s 529 savings plan asset levels to those of 12 years ago ($88.5 billion in 2008), the growth is marked, representing a 450 percent increase, or a 13.4 percent compound annual growth rate (CAGR). The main driver of this growth has been annual net inflows, which remained positive even during the market downturn of 2008 with net inflows of $5.3 billion during that year compared to net inflows in 2020 of $7.7 billion.
While potentially subject to a slowdown in 2020 and 2021 due to COVID-19-related economic and investment market turmoil, growth in accounts and assets continued and is expected to continue over the next 5 years.
“Gross contributions are expected to continue to grow based on the expansion of federal and state tax incentives and qualified expenses, thereby broadening 529 usage to new demographics and deepening of usage amongst current 529 users and new savers accrued during the pandemic,” said Paul Curley, Director of Savings Research for ISS Market Intelligence. “Moreover, this year’s survey shows 529 plan gross sales reaching all-time highs of $34.9 billion, supported by many families taking the opportunity to adjust their budgets, spending habits, and focus on their long-term financial goals including college planning.”
The 94-page report is undergirded by a survey of more than 1,000 U.S. households with children under the age of 18 to help identify the decision-making and product-selection processes of individuals who were at the time of the survey either 529 users, non-529 college savers or non-college savers.
Undertaken between March 18, 2021, and April 12, 2021, the survey shows more families are saving for college and slightly more families are saving with 529s than in 2019. Specifically, the percentage of families saving for college increased from 58.8 percent in 2019 to 62.9 percent in 2021, while the percentage of 529 users increased from 26.5 percent in 2019 to 28.9 percent in 2021. Presented differently, the percentage of college savers using 529 plans increased from 45.0 percent in 2019 to 45.9 percent in 2021, suggesting college savers are becoming more aware of the importance of saving and saving efficiently with 529 plans.
529 plans also appear to be growing in favor for their versatility in helping families retool in the current economic environment through an expanded definition of sanctioned programs. The December SECURE Act, for example, proved timely with its expansion of qualified 529 distributions to include apprenticeships and repayment of student loans. The potential for near-term legislative and regulatory reform may further stimulate interest in and demand for 529 plans.
“Discussions around the CARES Act allowing employers to match employee student loan repayments opens the door to help retain and attract top talent through education financial planning benefits as we enter the post-COVID phase,” said Curley. “We may see employees shifting their mindset on the importance of retooling and saving automatically for goals through their employers, spurring more employers to help current and future employees to save through such plans instead of opting for loans.”
To learn more about the report, please click here.
###
About ISS Market Intelligence
A division of Institutional Shareholder Services, ISS Market Intelligence (MI) provides critical data and insight to global asset managers, insurance companies and distributors to help them make informed, strategic decisions to manage and grow their business. Through its industry-leading combination of proprietary and integrated datasets, in-depth global research and reliable executive engagement, ISS MI delivers solutions for market sizing, competitor benchmarking, product strategy and opportunity identification across a wide range of financial products including funds, annuities, insurance, mortgages, and other instruments. The ISS MI group includes the industry-leading data platforms BrightScope, Financial Clarity, Local Market Share, Mortgage Clarity and Simfund, as well as a full collection of global research and analytic services including 529 & ABLE Solutions, Investor Economics, Market Metrics and Plan For Life. For more information about ISS Market Intelligence, please visit issgovernance.com/market-intelligence.
Media Contact:
Subodh Mishra, Managing Director
+301-556-0304
subodh.mishra@issgovernance.com
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