SavingForCollege.com Top 529 Plan Rankings 2015

Savingforcollege.com is a popular privately-run site for researching and comparing 529 college savings plans. They released their updated ratings this month, which represents their “opinion of the overall usefulness of a state’s 529 plan based on many considerations.” The judgement criteria include:

• Performance. They selected similar “apples-to-apples” portfolios with 7 different asset allocations from each plan and rated them based on historical performance. Rankings are updated each quarter.
• Costs. Total average asset-based expense ratios among plans are compared, in addition to separately considering program manager fees, administrator fees, and annual account maintenance fees.
• Features. This includes other factors that affect participants, including the ability of the plan change their investment options quickly if called for; creditor protection under the sponsoring state’s laws; availability of FDIC-insured options; minimum and maximum contribution restrictions.
• Reliability. The appears to measure the likelihood of a good plan staying a good plan. Do they have experienced program managers? Does the plan have a good amount of assets? What is the quality of the documentation and reporting? How restrictive are the withdrawal and rollover processes?

Here is the full list of 5-Cap Ratings for each state, on a scale of 0 to 5 Caps. Note that there are separate ratings for in-state and out-of-state residents. The following plans received a 5-Cap Rating for in-state residents (alphabetical order):

• California: The ScholarShare College Savings Plan
• Colorado: Direct Portfolio College Savings Plan
• Colorado: Scholars Choice College Savings Program – Advisor Plan
• Illinois: Bright Start College Savings Program – Direct Plan
• Iowa: College Savings Iowa
• Maine: NextGen College Investing Plan – Direct Plan
• Maine: NextGen College Investing Plan – Advisor Plan
• Michigan: Michigan Education Savings Program
• Nebraska: Nebraska Education Savings Trust – Advisor Plan
• Nebraska: Nebraska Education Savings Trust – Direct Plan
• New York: New York’s College Savings Program – Direct Plan
• Ohio: Ohio CollegeAdvantage 529 Savings Plan
• Rhode Island: CollegeBoundfund – Direct Plan
• South Carolina: Future Scholar 529 College Savings Plan – Advisor Plan
• South Carolina: Future Scholar 529 College Savings Plan – Direct Plan
• Utah: Utah Educational Savings Plan (USEP)
• West Virginia: SMART529 WV Direct College Savings Plan
• Wisconsin: Edvest

Out of the 100+ different plans they rated, here are the 4 programs that attained the top 5-Cap Rating for out-of-state residents (alphabetical order):

• California: The ScholarShare College Savings Plan
• Maine NextGen College Investing Plan – Direct Plan
• New York’s College Savings Program – Direct Plan
• Ohio CollegeAdvantage 529 Savings Plan

Consistently top-rated plans. The last time I noted these rankings was 2012, and the following plans were 5-Cap rated back then and also now: California, New York, and Ohio.

I should point out that the SavingForCollege Top-rated 5-Cap plans are different than the Morningstar Top-rated Gold plans. In fact, there is no overlap at all! Two of my favorite Gold-rated plans, the Vanguard 529 Savings Plan (Nevada) and Utah Educational Savings Plan received 4.5 out of 5 Caps, although I am not exactly sure why.

However, in general the top 15 or so plans are pretty much the same for both. With that in mind, I see nothing wrong with most Morningstar Silver Plans and/or the 4.5 Cap SavingForCollege plans, if their investment options meet your needs. Here were my personal finalist 529 plans and asset allocations.

Finally, here is another resource about comparing the state-specific tax benefits that may be available to you.