JPMorgan Urges 529 College Savings at Birth as Costs Climb

JPMorgan Asset Management's Head of Education Savings, Tricia Scarlata, advised parents to begin investing in a 529 college savings plan at a child's birth to avoid missing out on decades of compounding returns. The guidance, issued ahead of the annual 529 Day observance, spotlights the intense pressure families face from rising education expenses. Scarlata's comments from the Bloomberg interview underscore a strategic priority for asset managers like JPMorgan, whose stock traded at $299.31 as of 09:37 UTC today. The firm's shares have fluctuated between $295.23 and $299.60 in the current session, showing a minor gain of 0.01%.

Context — why this matters now

The push for ultra-early savings occurs against a backdrop of stubbornly high education inflation. The College Board reports that over the past 20 years, published tuition and fees for public four-year in-state colleges have increased at an average annual rate of 3.5% above general inflation. The current economic environment of elevated, though stabilizing, interest rates makes the long-term tax-free growth offered by 529 plans particularly attractive compared to taxable savings accounts. JPMorgan's public advocacy aligns with a business strategy to capture assets early in a family's financial lifecycle, creating a sticky, long-duration client relationship. The firm manages one of the largest 529 plan operations in the US, making its public commentary a direct indicator of product demand and marketing focus.

Data — what the numbers show

Starting a 529 plan at birth versus at age 10 can result in a dramatically different outcome due to compounding. An initial investment of $10,000 growing at a conservative 6% annual return would amount to approximately $57,435 after 18 years. The same investment started eight years later, at age 10, would grow to only $32,071 by college age. Total assets in 529 plans reached $479 billion at the end of 2025, according to the Investment Company Institute, reflecting their central role in education funding. For comparison, the S&P 500 index has delivered an average annual return of approximately 10% over the past 30 years, though 529 plan portfolios are typically more conservatively allocated. JPMorgan's own 529 plan assets under management represent a significant portion of this total, contributing to the firm's overall asset management revenue stream.

Analysis — what it means for markets / sectors

Scarlata's commentary is a positive indicator for the asset management and financial services sector, particularly for firms with large 529 plan businesses like JPMorgan, Franklin Resources (BEN), and The Vanguard Group. Increased participation in these plans translates directly into higher, predictable fee-based revenue. The advice may also benefit providers of age-based target-date funds, which are the default option in many 529 plans. A primary risk to this growth thesis is potential legislative change; while 529 plans are currently tax-advantaged, future tax reforms could alter their benefits. Current market positioning shows institutional investors favoring asset managers with durable revenue streams less dependent on volatile trading income, a category that includes 529 plan administration.

Outlook — what to watch next

The next major catalyst for the education savings sector is the upcoming 529 Day on May 29, which many plan providers use to promote enrollment with matching grant campaigns. Key levels to monitor are the quarterly reports on 529 plan net contributions from the College Savings Plans Network, with the next data release expected in late July. The performance of age-based portfolio glide paths will be scrutinized against the 10-year Treasury yield, which serves as a benchmark for the conservative fixed-income allocations within these funds. Any significant shift in Federal Reserve policy communicated at the July FOMC meeting could impact the assumed rate of return for these long-term savings vehicles.

Frequently Asked Questions

What is the best 529 plan to choose?

The best 529 plan depends on your state of residence and investment preferences. Many states offer a tax deduction or credit for contributions to their in-state plan, which can be an immediate financial benefit. However, you are not required to use your home state's plan, and it is wise to compare investment options, fees, and performance across plans from multiple states. Low expense ratios are a critical factor, as high fees can significantly erode compounding returns over an 18-year period.

Can 529 plan funds be used for anything other than college?

Yes, recent legislative changes have expanded the uses for 529 plan funds. Up to $10,000 per year can be used for K-12 tuition expenses. funds can now be used for registered apprenticeship programs and to pay down student debt, with a lifetime limit of $10,000 per beneficiary. Unused funds can also be rolled over into a Roth IRA for the beneficiary, subject to annual contribution limits and a 15-year holding period for the 529 account.

How does a 529 plan affect financial aid eligibility?

A 529 plan owned by a parent is considered a parental asset on the Free Application for Federal Student Aid (FAFSA). Parental assets are assessed at a maximum rate of 5.64%, meaning only a small fraction of the value reduces aid eligibility. This is far more favorable than student-owned assets, which are assessed at 20%. Grandparent-owned 529 plans no longer need to be reported on the FAFSA, removing a previous negative impact on aid calculations.

Bottom Line

Starting a 529 plan at birth leverages decades of compounding to combat education cost inflation.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.