September is “College Savings Month” (But is it, really?)

September is here again – and in the 529 industry, that means College Savings Month has begun.  It’s a fall tradition filled with celebrations and promotions aimed at college-bound students.  But this year, after so many changes – legal, cultural, societal – we find ourselves questioning tradition.

After all, “College” Savings Plans have graduated, so-to-speak.  Now they’re off to kindergarten, and electrical apprenticeships, and coding bootcamps.  And if the Plans aren’t just for college anymore, maybe September isn’t, either.  We wonder:  Has the time come to rename College Savings Month?

Five years ago, legislative initiatives began dramatically changing the face of 529 Plans.  In 2017, Congress passed the Tax Cuts and Jobs Act (“TCJA”), which expanded the qualified use of 529 assets, allowing savings to be used for K-12 educational expenses, including public, private and religious tuition costs.  Another expansion occurred in 2020, when the SECURE Act included a provision allowing 529 Plans to pay for certain apprenticeship programs (and the repayment of certain student loans, too).

Truthfully, all of this legislation was following, rather than creating, new educational trends – trends that show an increasing attraction to nondegree programs as well as later-in-life education.  Indeed, interest in traditional four-year colleges has been waning recently, both as quarantines shut down schools and as the student debt level rises.  A recent survey of U.S. high-schoolers showed a shocking 20% decrease in the likelihood of students enrolling in a four-year college.¹  At the same time, interest in affordable college alternatives has boomed, and many pre-eminent tech employers (including Apple and Google) are beginning to drop their requirements for college degrees.² 

Other trends show a growing interest in additional schooling beyond ages 18 to 22.  According to a recent Washington Post-Schar School poll, nearly one in three adults under age 40 is contemplating a change of profession, many as a result of the pandemic.³  And career changes often involve more education in middle age or later.

Just don’t expect these career-changers to enroll in a four-year degree program.  According to a recent Strada-Gallup education survey, Americans who are considering switching careers because of pandemic-related job loss are much more interested in nondegree skills programs rather than college.⁴  

It all adds up to this:  the education savings market is moving beyond college, and a new type of 529 consumer is emerging.  [Or perhaps they’ve been here all along and we’re just now noticing – after all, roughly as many Americans have completed nondegree programs as have completed degree programs.⁵]  The good news is that, thanks to legislation like the TCJA and the SECURE Act, 529 Plans are already primed to expand with these trends.  And yes, the pandemic may have exacerbated these shifts, but it is likely that the face of “higher” education will continue to change.  What will not change, though, is the need to fund education, no matter the form – and 529 Plans remain an excellent, if not the best, way to do so.

As we noted in our June 2021 529 Market Report, we believe that this new breed of 529 consumer should be embraced, and that Plans should make room in their marketing budgets for outreach to Americans pursuing alternative education journeys.   529 Plans can continue to be an integral part of a person’s career path, even if that path does not include a traditional four-year college.

But if we are to fully embrace this (potentially huge) new non-college market segment, we might need to consider updating some of the industry’s more popular monikers.  So – anyone up for “Education Savings Month” in September 2022?