More than half of American families who plan to send their children to college have not started saving and 75% have not heard of 529 college savings programs, according to a national survey conducted by Morgan Stanley of New York. Morgan Stanley manages College SAVE, a 529 plan offered by the state of North Dakota.

According to an online survey of 1,079 families, 54% of those who plan to send their children to college have not started saving for college. Sixty-seven percent of those who are saving believe they are not saving enough. The study also indicated that, despite recent press coverage on the tax advantages associated with 529 college savings plans, three quarters of survey respondents said they were unaware of 529s.

Given how 529 plans have been in the news this past year, the public's ignorance is a bit of a surprise. The IRS made 529 proceeds exempt from federal taxes, while nearly two dozen states made contributions to 529s deductible. And a number of financial service companies introduced new 529 plans.

Joseph F. Hurley, founder of LLC of Pittsford, N.Y., and author of The Best Way to Save for College, A Complete Guide to 529 Plans, noted that many financial firms have created load 529 products to sell these rather complicated products through financial planners. Now that financial planners have an incentive to sell 529s, the public's awareness of these college savings vehicles should increase, he said. "These new products offer advisors an incentive to present the 529 plan," Hurley said. "All the talk about various plans is creating a tremendous demand for education on 529s from financial professionals."

"529s can be tremendously confusing," Hurley said. "The public is looking for professional advice. This creates a perfect opportunity for companies offering [a] 529 to provide financial advisors with the information they need" to grow their business by selling 529s, he said.

In fact, has partnered with College Funding Inc. of Plentywood, Mont., to educate financial planners about 529s. Called the Certified College Planner (CCP) professional education and certification program, it is designed for registered representatives, registered investment advisers, certified financial planners, certified public accountants and attorneys.

Hurley reports a tremendous amount of interest in the CCP program, which he expects to be a factor in increasing the visibility of the 529. By the end of the year, Hurley expects Americans will have invested $25 billion in 529s, up from $10 billion at the beginning of 2002.

Finally, the Morgan Stanley study did illuminate one positive statistic. The investment community's emphasis on the need to begin saving early for college seems to have registered with the public. The survey indicated that 70% of American families who have started investing for their children's college education did so before their child reached age five. Twenty-one percent started saving when their child was six to 10 years old.

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