Many parents fully expect to pay for (or at least help pay for) their children to attend college. This, however, is becoming an increasingly daunting task. The cost of a college education continues to rise, becoming almost prohibitive. One of the first things to realize as you prepare to pay for your child’s education, or prepare to have your child get ready to pay for his or her own education, is that it is highly unlikely that you will be able to rely on one source of funding to meet your needs.
[Read more…] about Do You Know How You Will Pay for College?
College
Best And Worst College 529 Plans From Morningstar
Morningstar has released their picks for the top five and worst five 529 college-savings plans. To make their choices, Morningstar “focused on diversification, fees, flexibility, and the underlying funds.”Here are the top five:
– Illinois Bright Start College Savings Program
– Maryland College Investment Plan
– Virginia Education Savings Trust
-Virginia CollegeAmerica 529 Savings Plan (broker sold)
– Colorado Scholars Choice Savings Program (broker sold)
The worst five:
– Ohio Putnam CollegeAdvantage (broker sold)
– Mississippi Affordable College Savings Program
– Mississippi Affordable College Savings Advisor Program (broker sold)
– New York 529 College Savings Program
– Nebraska AIM College Savings Plan (broker sold)
I’m a little concerned that New York’s plan is considered one of the worst. Not only do I have two funds under the plan (one for each child) I also said recently that it’s a good plan. The main criticism from Morningstar is that the plan doesn’t have any exposure to international funds so it’s been missing out on international gains and it’s not hedged against US economy downturns. Other wise Morningstar says it’s moderately priced and they like that it’s made up of Vanguard index funds.
Many people, like myself, contribute to their own state’s plans since it’s likely they get a tax break. But depending on the plan and state you may be better off contributing to another state’s plan.
The Wall Street Journal suggests the following when considering a 529 plan:
“• When shopping for a 529 plan, you should consider costs, investment options and asset-allocation strategies.
• Weigh any tax advantages of investing in an in-state plan against the plan’s total costs.
• Look for annual asset-based fees of less than 1% for direct-sold plans and less than about 1.3% for broker-sold plans.
• Compare state plans at www.savingforcollege.com, www.collegesavings.org or www.morningstar.com.”Hopefully Morningstar’s review will prompt the New York 529 plan to consider some international exposure otherwise I may have to look into some of the better plans.
Do you contribute to a 529 college-savings plan?
