Ask Kim
Grade the College Savings Plan
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
January 9, 2002
I'm looking for data that compares the performance of the numerous state 529 college savings plans. There are lots of articles about the plans and who manages them (and compares the investment options), but nothing on actual past performance statistics. Do you know of any place to find this data?
You can get a lot of great information at Savingforcollege.com. The site's investment results page includes links to performance statistics for all the investment options offered in each state.
Look carefully at the reporting date, though, before comparing investment returns from state to state. Some of the numbers are through the quarter ending December 31, while others are only through September. Visit the state plan's Web site to see if more recent figures are available, as well as detailed information about the investment options, rules and fees. For links to each state's site, go to the state college savings plans map, which also includes Kiplinger's ratings and analysis of each plan.
While you're at the state's site, look carefully at your investment choices. Some states only offer age-based plans, where everyone the same age is invested in the same portfolio. Typically the younger the child, the more aggressive the investment mix. Some of these plans tend to be too conservative for long-term investors, with 50% in bonds before the child reaches age 10. Our favorite plans tend to keep more money invested in stock funds until the last years before college.
But don't judge plans on performance alone. Your own state's plan may edge out out picks if it's one of the 23 that offers residents a state income-tax deduction for contributions.
In addition to the plan summaries at our Web site, check out the 529 evaluator at Savingforcollege.com, which lets you generate a big chart comparing every state's options in a variety of criteria -- including whether or not they offer an age-based portfolio and which company manages the funds.
For more information about 529 plans and the new rules, see Fertile New Ground for College Savers.