The Best and Worst 529 College Savings Plans
529 college-savings plans have a bright future.
Several years ago, many were high-cost messes. Since then, some have been spruced up and others have been shut down. The important thing is that more people using these vehicles to save for college are getting a good deal.
Morningstar has been particularly pleased to see some regulars on their worst-plans list cleaned up their acts. It still isn’t perfect, but North Dakota’s College SAVE Plan, a worst constituent in 2006, changed for the better when it dropped its growth-leaning Morgan Stanley lineup for an assortment of stellar Vanguard index funds. And although it still has a few pricier funds in the mix, one of 2007’s worst, Missouri’s MOST 529 Advisor Plan, made its way off the list by adding better funds and cutting its formerly excessive expenses to a more reasonable level.
Morningstar complied their best and worst lists byfocusing on diversification, fees, flexibility, and the underlying funds when deciding which 529 plans to highlight. We like to see plans that aren’t heavily reliant on any one area of the market, because that can mean a more volatile ride and lower returns than what investors face at better-diversified 529 programs. Costs are key because they come directly out of investors’ returns, meaning the higher the price tag, the lower the returns.
The Best
- Illinois Bright Start College Savings Program OppenheimerFunds Inc.
- Maryland College Inv Plan T. Rowe Price
- Virginia CollegeAmerica* Virginia (American Funds)
- Virginia Education Savings Trust Virginia
- Colorado Scholars Choice College Savings Program* Legg Mason, Inc
The Worst
- Ohio Putnam CollegeAdvantage* Putnam Investment Management
- Mississippi Affordable College Savings Program TIAA-CREF
- Mississippi Affordable College Savings Program* TIAA-CREF
- New York 529 College Savings Program Upromise
- Nebraska AIM College Savings Plan* Union Bank (AIM)
