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Households Save More With 529s

Parents without a plan leave money on the table.

The largest source of money U.S. families use to pay for college, after scholarships and grants, is loans. The challenge for many parents is simple: How can we borrow less and still pay for college?

In a recent Morningstar report, Michael Leung and I analyzed one such tool to help families afford college: the 529 college savings plan. The report, released in tandem with our 2018 ratings of 529 plans (and available on, examined whom 529 plans would benefit, and why. Unlike most studies that examine hypothetical families, this report analyzed the finances of actual U.S. households, using two nationally representative surveys: the Federal Reserve Bank’s “Survey of Consumer Finances” and the Sallie Mae/Ipsos survey, “How America Saves for College.”