Survey: Most parents don’t know what a 529 savings plan is

College costs keep rising, and many parents are finding they haven't done enough to prepare for the expense. In fact, many parents remain completely unaware of an efficient way to save money for school that costs less in taxes.

More than two-thirds (67%) of Americans do not know what a 529 plan is, according to a new study from Edward Jones. That's actually a 5% increase from 2012, the first year the study was conducted.

Even those who have a basic understanding of 529 plans don't know all the facts. Among those who could identify a 529 plan as an education savings vehicle, nearly half (48%) did not know that money saved via a 529 plan can be used to pay for qualified K-12 expenses, not just for college.

College tuition for an out-of-state school came in at $34,740 per year in 2017-2018, according to CollegeData.com. That's nearly $140,000 over four years, and the number will likely be higher because tuition generally rises each year.

Of course, there are cheaper options, and a number of companies have started offering paid or low-cost tuition. Students can also go to state schools or community colleges. And for some of the pricier schools, $140,000 may not pay for three years let alone four, and a 529 — which allows parents to save money and not pay taxes on any gains if used for qualified educational expenses — can be a cost-effective way to save for that huge charge.

It's important to note that 529 plans vary by state and also important to remember that taxpayers aren’t limited to using the one offered by the state in which they live. The drawback is that money in a 529 plan only gets the benefit of not having to pay taxes on any earnings if it's used for qualified educational expenses. Edward Jones found that people are prioritizing other forms of saving. Here's how survey respondents ranked the importance of five different savings goals.

• Preparing for retirement (30%)

• Preparing for the unexpected (24%)

• Living in retirement (21%)

• Paying for education (8%)

• Planning for their estates or inheritances (5%)

Even for parents who have children under the age of 18, saving for college was not a priority. Only 8% of that group ranked college savings as their top goal.