NEW YORK (June 13, 2023) – ISS Market Intelligence (ISS MI), a unit of Institutional Shareholder Services and a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry, today announced the release of its annual 529 Industry Analysis report. The report, now in its 14th year, provides an in-depth analysis of the state of the 529 industry as well as the decision-making and product-selection processes of individual survey respondents regarding education saving choices.
529 industry assets continue to grow, totaling $411.3 billion at the close of 2022, ISS MI data show. When comparing today’s 529 savings plan asset levels to those of 14 years ago ($88.5 billion in 2008), the growth is marked, representing a 338 percent increase, or an 11.1 percent compound annual growth rate. The main driver of this long-term growth has been annual net inflows, which remained positive even during the market downturns of 2008 and 2022, with 2008 net inflows of $5.3 billion and 2022 net inflows of $3.4 billion. However, ISS MI data show that the overall education savings market, defined as assets earmarked to pay for college, contracted in 2022, dropping to $1.672 trillion at year end.
Despite the market slowdown in recent years due to COVID-19-related economic and investment market turmoil and subsequent economic and market volatility, growth in 529 accounts and assets is expected to continue over the next five years.
“We expect gross contributions to return to growth, based on the expansion of federal and state tax incentives and qualified expenses introduced as part of the SECURE 2.0 Act, thereby broadening 529 usage to new demographics and deepening usage among current 529 users,” said Paul Curley, Associate Director of 529 & ABLE Solutions at ISS Market Intelligence. “Moreover, this year’s survey shows a new all-time high for the percentage of U.S. family households using 529 plans at 14.2 percent, supported by new families and demographics motivated by the long-term importance of education financial planning and the prevalence of automatic savings, tax incentives, and the lower unemployment environment.”
Underpinning the 122-page report is 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 April 3 and 18, 2023, the survey shows that many responding families are saving for education and are using 529 plans, but opportunities for growth continue. The percentage of surveyed families who are saving for college decreased from 2022 at 71.2 percent to 2023 at 66.6 percent, while the percentage of 529 users decreased slightly by 0.1 percent to 26.2 percent in 2022. 529 plan users continue to save through the market and economic volatility in 2023, as evidenced by a decrease of only 0.1 percent in usage from 2022 (26.3 percent) to 2023 (26.2 percent). As a result, the percentage of those saving for college who are using 529 plans increased from 36.9 percent in 2022 to 39.3 percent in 2023, indicating that 529s are gaining momentum among those saving for education (as opposed to non-college savers).
529 plans also appear to be growing in favor for their versatility in helping a broader set of families retool in the current economic environment through an expanded definition of sanctioned programs. Notably, the December SECURE 2.0 Act expanded qualified 529 distributions to include certain types of rollovers to Roth IRAs effective 2024, building upon other recent legislative wins that expanded qualified distributions to K-12 tuition, apprenticeships, and repayment of student loans. Early market data suggests that the greater flexibility will accelerate the growth trajectory of 529s amongst current 529 users, non-529 education savers, and non-savers. To learn more about the report, please click here.
###
About ISS Market Intelligence
ISS Market Intelligence (MI) is a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry. ISS MI empowers global asset and wealth management firms, insurance companies, distributors, service providers, and technology firms by providing cutting-edge market-engagement platforms and the actionable intelligence necessary to fully assess their target markets, identify and analyze the best opportunities within those markets, and execute on comprehensive go-to-market initiatives to grow their business. ISS MI clients benefit from our increasingly connected global ecosystem that leverages a combination of proprietary data, powerful software and analytics, timely and relevant insights, in-depth research, as well as an extensive suite of industry leading media brands that deliver unmatched market connectivity through news and editorial content, events, training, ratings, and awards. ISS MI data and analytics solutions include intelligence from BrightScope, Discovery Data, Financial Clarity, Flowspring, FWW, Investor Economics, MISight, Mortgage Clarity, Plan for Life, RainmakerLive, and Simfund, and ISS MI media brands and market-engagement platforms include Chief Investment Officer, PlanAdvisor, PlanSponsor, Financial Standard, FS Sustainability, Money, and Industry Moves.
About ISS
Founded in 1985, Institutional Shareholder Services group of companies (ISS) empowers investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics and insight. ISS, which is majority owned by Deutsche Bourse Group, along with Genstar Capital and ISS management, is a leading provider of corporate governance and responsible investment solutions, market intelligence, fund services, and events and editorial content for institutional investors and corporations, globally. ISS operates on an arm’s-length basis and Deutsche Bourse has adopted Principles protecting the independence and integrity of ISS’ research offerings. ISS’ 2,000 employees operate worldwide across more than 30 global offices in 15 countries. Its more than 4,000 clients include many of the world’s leading institutional investors who rely on ISS’ objective and impartial ESG and governance research, market intelligence and fund services and data and analytics, as well as public companies focused on ESG and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS’ expertise to help them make informed investment decisions.
Media Contact:
Audrey Dedrick
Associate, Communications
press@issgovernance.com
ISS Market Intelligence Releases Annual 529 Industry Analysis Report
NEW YORK (June 13, 2023) – ISS Market Intelligence (ISS MI), a unit of Institutional Shareholder Services and a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry, today announced the release of its annual 529 Industry Analysis report. The report, now in its 14th year, provides an in-depth analysis of the state of the 529 industry as well as the decision-making and product-selection processes of individual survey respondents regarding education saving choices.
529 industry assets continue to grow, totaling $411.3 billion at the close of 2022, ISS MI data show. When comparing today’s 529 savings plan asset levels to those of 14 years ago ($88.5 billion in 2008), the growth is marked, representing a 338 percent increase, or an 11.1 percent compound annual growth rate. The main driver of this long-term growth has been annual net inflows, which remained positive even during the market downturns of 2008 and 2022, with 2008 net inflows of $5.3 billion and 2022 net inflows of $3.4 billion. However, ISS MI data show that the overall education savings market, defined as assets earmarked to pay for college, contracted in 2022, dropping to $1.672 trillion at year end.
Despite the market slowdown in recent years due to COVID-19-related economic and investment market turmoil and subsequent economic and market volatility, growth in 529 accounts and assets is expected to continue over the next five years.
“We expect gross contributions to return to growth, based on the expansion of federal and state tax incentives and qualified expenses introduced as part of the SECURE 2.0 Act, thereby broadening 529 usage to new demographics and deepening usage among current 529 users,” said Paul Curley, Associate Director of 529 & ABLE Solutions at ISS Market Intelligence. “Moreover, this year’s survey shows a new all-time high for the percentage of U.S. family households using 529 plans at 14.2 percent, supported by new families and demographics motivated by the long-term importance of education financial planning and the prevalence of automatic savings, tax incentives, and the lower unemployment environment.”
Underpinning the 122-page report is 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 April 3 and 18, 2023, the survey shows that many responding families are saving for education and are using 529 plans, but opportunities for growth continue. The percentage of surveyed families who are saving for college decreased from 2022 at 71.2 percent to 2023 at 66.6 percent, while the percentage of 529 users decreased slightly by 0.1 percent to 26.2 percent in 2022. 529 plan users continue to save through the market and economic volatility in 2023, as evidenced by a decrease of only 0.1 percent in usage from 2022 (26.3 percent) to 2023 (26.2 percent). As a result, the percentage of those saving for college who are using 529 plans increased from 36.9 percent in 2022 to 39.3 percent in 2023, indicating that 529s are gaining momentum among those saving for education (as opposed to non-college savers).
529 plans also appear to be growing in favor for their versatility in helping a broader set of families retool in the current economic environment through an expanded definition of sanctioned programs. Notably, the December SECURE 2.0 Act expanded qualified 529 distributions to include certain types of rollovers to Roth IRAs effective 2024, building upon other recent legislative wins that expanded qualified distributions to K-12 tuition, apprenticeships, and repayment of student loans. Early market data suggests that the greater flexibility will accelerate the growth trajectory of 529s amongst current 529 users, non-529 education savers, and non-savers. To learn more about the report, please click here.
###
About ISS Market Intelligence
ISS Market Intelligence (MI) is a leading global provider of data, analytics, insights, media, and events solutions to the global financial services industry. ISS MI empowers global asset and wealth management firms, insurance companies, distributors, service providers, and technology firms by providing cutting-edge market-engagement platforms and the actionable intelligence necessary to fully assess their target markets, identify and analyze the best opportunities within those markets, and execute on comprehensive go-to-market initiatives to grow their business. ISS MI clients benefit from our increasingly connected global ecosystem that leverages a combination of proprietary data, powerful software and analytics, timely and relevant insights, in-depth research, as well as an extensive suite of industry leading media brands that deliver unmatched market connectivity through news and editorial content, events, training, ratings, and awards. ISS MI data and analytics solutions include intelligence from BrightScope, Discovery Data, Financial Clarity, Flowspring, FWW, Investor Economics, MISight, Mortgage Clarity, Plan for Life, RainmakerLive, and Simfund, and ISS MI media brands and market-engagement platforms include Chief Investment Officer, PlanAdvisor, PlanSponsor, Financial Standard, FS Sustainability, Money, and Industry Moves.
About ISS
Founded in 1985, Institutional Shareholder Services group of companies (ISS) empowers investors and companies to build for long-term and sustainable growth by providing high-quality data, analytics and insight. ISS, which is majority owned by Deutsche Bourse Group, along with Genstar Capital and ISS management, is a leading provider of corporate governance and responsible investment solutions, market intelligence, fund services, and events and editorial content for institutional investors and corporations, globally. ISS operates on an arm’s-length basis and Deutsche Bourse has adopted Principles protecting the independence and integrity of ISS’ research offerings. ISS’ 2,000 employees operate worldwide across more than 30 global offices in 15 countries. Its more than 4,000 clients include many of the world’s leading institutional investors who rely on ISS’ objective and impartial ESG and governance research, market intelligence and fund services and data and analytics, as well as public companies focused on ESG and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS’ expertise to help them make informed investment decisions.
Media Contact:
Audrey Dedrick
Associate, Communications
press@issgovernance.com
Can the Biden Administration Unlock the United States’ Sustainability Potential?
Feet on the Accelerator: Fewer Companies Willing to Relinquish Power to Advance Equity Vesting
2023 Continental Europe Proxy Review
ISS ESG Top Ranked For Ratings Quality by Institutional Investors in SustainAbility by ERM Rate the Raters 2023 Report