Savingforcollege.com is a popular privately run site for researching and comparing 529 college savings plans. In June 2012, they updated their rating system 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?>/li>
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. Out of the 100+ different plans they rated, here are the 8 programs available directly to the public that attained the top 5-Cap Rating for both in-state and out-of-state residents (alphabetical order):
- ScholarShare College Savings Plan (California)
- Michigan Education Savings Program
- Nebraska Education Savings Trust – Direct Plan
- Vanguard 529 Savings Plan (Nevada)
- New York’s 529 College Savings Program – Direct Plan
- Ohio CollegeAdvantage 529 Savings Plan
- Oregon College Savings Plan
- Utah Educational Savings Plan (UESP)
In general, I would agree that the plans on this list are among the best, but remember to consider your in-state plan first for potential tax advantages.