Americans have just $21,000 saved for college in the average 529 account, according to a new report from Ascensus Inc., which is a recordkeeper and administrator of more than 3.3 million 529 plan accounts.

The company, which administers about a quarter of all 529 accounts in the United States, found that more than 80% of its accounts had balances below $30,000 as of January 26 of this year. Accounts with less than $10,000 were about 55% of the total. Fewer than 4% had at least $100,000 in them.

The average annual cost of a four-year college or university was $20,000 for public schools at in-state rates for the 2013-2014 academic year; at private schools it was more than $42,000 per year, according to Ascensus.

“Families are saving steadily at modest levels over the beneficiary's childhood,” Ascensus said in an announcement. “As a result, 529s are helping lessen families' reliance on other funding for higher education.”

Excluding accounts for younger children, whose families are likely just getting started on college savings plans, the data doesn't look much different: About 70% of 529 accounts for 16- and 17-year-old beneficiaries had less than $30,000 in them, Ascensus found. Only about one in five accounts had balances over $100,000.

Of the 16 million individual contributions it said it processed in 2014, Ascensus found that about 60% were $100 or less. Virtually all, 95%, were under $1,000. Over 60% had total annual contributions of $2,000 or less; 75% were under $4,000.

“Every little bit helps when it comes to saving for higher education, and our data shows families are embracing that concept by investing in 529 plans,” Ascensus President Jeff Howkins said. “When it comes time to finance a child's four-year college, community college or trade school education, 529 funds stand to make a substantial impact on expenses and reward those who have the foresight to save.”

The maximum annual contribution to a 529 is $14,000. However, the IRS allows a donor to contribute up to five times the annual federal gift tax exclusion amount for a designated beneficiary in a single year (currently $70,000, or $140,000 for a married couple electing to split gifts) and apply the contribution against the exclusion over five years.

Instant Insights /

Americans Save Modestly for College: Ascensus

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