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10 cheapest and priciest 529 college savings plans

(MoneyWatch) Some good news for people saving for college: While school costs continues to climb, the fees for 529 college savings plans continue to decline. 

The cheapest 529 plans are well below the price of most off-the-shelf mutual funds, according to a new analysis by investment research firm Morningstar. The most inexpensive 529 plans are all directly sold to the public. By contrast, the priciest plans are sold through financial advisers, adding an extra layer of fees.

10 cheapest 529 colleges savings plans

According to Morningstar, here are the 10 cheapest 529 plans based on their overall expense ratios:

1. Future Scholar 529 (S.C.)  .13 percent
2. New York's 529 Program .17 percent
3. Utah Educational Savings Plan .23 percent
4. Michigan Education Savings Program .25 percent
5. EdVest 529 Plan  (Wis.) .25 percent
6. College Savings Iowa 529 Plan .28 percent
7. Vanguard 529 College Savings Plan (N.V.) .29 percent
8. SMART529 WV Direct College Savings Plan (W.V.) .33 percent
9. Path2College 529 Plan (Ga.) .34 percent
10. CollegeAdvantage 529 Savings Plan (Ohio) .35 percent
10. MOST Missouri's 529 Plan .35 percent

10 most expensive 529 college savings plans

The priciest 529 plans are all sold through financial professionals. Strangely enough, South Dakota's adviser plan and its directly sold one share the same stiff expense ratio.

1. John Hancock Freedom 529 (Ak.) 1.88 percent
2. MFS 529 Savings Plan (Ore.) 1.80 percent
3. Franklin Templeton 529 College Savings Plan (N.J.) 1.76 percent
4. Iowa Advisor 529 Plan 1.74 percent
5. LearningQuest 529 Program (Kan.) 1.64 percent
6. Fidelity Advisor 529 Plan (N.H.) 1.61 percent
7. Lonestar 529 Plan (Tex.) 1.58 percent
8. Putnam 529 for America (N.V.) 1.56 percent
9. CollegeAccess 529 (S.D.) 1.55 percent
9. ScholarEdge (N.M.) 1.55 percent
10. Michigan 529 Advisor 1.50 percent
10. Future Scholar 529 (S.C.) 1.50 percent

529 plan expenses shrinking

One of the knocks against 529 plans has been that the college savings vehicle's underlying mutual funds are too expensive compared to the same funds that are sold without the 529 wrapper in the open market. However, Morningstar notes that the price gap between funds that you can buy at any brokerage firm versus 529 plans offered by states has been shrinking in all investment categories.

In 2010, 529 plans charged up to 40 basis points more on average than the investment peer group funds that anybody could buy directly through a financial firm. In 2011, the gap narrowed to 31 basis points, and in it's newly released analysis Morningstar says it has tightened even further across all investment categories, as shown in the table below.


An excellent way to stretch your college dollars is to invest cheaply. If you do, you'll increase your chances of ultimately having more money to sink into a college degree.

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