College Saving and Section 529

I’ve been doing quite a bit of poking around on this and I thought this would be a good place for other parents who are trying to save for college to share information.

In a nutshell, what I’ve learned can be summed up (very briefly) as follows.

There are three main sites for info on these plans: (ratings) (ratings) (poke around… they have a free section on 529 plans) (sorta ratings - shows a chart rating the underlying funds. It doesn’t rate the plan itself.)

The more I read about the plans, the more I decided my decision would be based on Fees, Fund Manager and Options.

The more I dug into this, I came to the conclusion that Iowa has one of the best plans for me. They have low fees at 0.65%, they are managed by Vanguard and the options, while not overly expansive, should be enough for me.

A very close second was the Nevada plan. I just couldn’t pull the trigger on gambling on my kids’ college education in Nevada, though.

Does anyone have experiences or thoughts they’d like to share? What plan did you go with? Why?

New Mexico Plan offered through College Sense. It allows you to go anywhere in the US and its territories at accredited universities. It has an age based asset allocation which becomes more conservative as your child ages. So if you have young children it will be vey aggresive and as they age it will be less and less aggresive trying to conserve your gains. It’s also linked with the Upromise program and Managed by 3 investment advisors. New York Life Investment Management, State Street Global Advisors and J.P. Morgan.

Having 3 advisors working for you gives you better pickings than just one. You also need to check out the Upromise program.

I think every 529 programs offers the ability to attend any accredited university, so for me that wasn’t a factor. This does imply I have not been looking at the pre-paid options. Others might chime in on those.

I did look at the Upromise program, but at least for me there wasn’t enough incentive to enroll or make my 529 decision based on that. I don’t have a grocery card, there are no participating restaurants around here, and none of the other programs seemed to make it worthwhile.

The links to the plan you talk about aren’t working from nor from savingforcollege, but I’ll check em out later!

One other thing I should point out.

I also stayed away from advisor sold plans because they tend to have higher fees. I don’t know if this is the case for the New Mexico plan (college sense) or not, but I do see that it is only advisor sold.

If you make your purchasing decisions based solely on fees you are setting yourself up for a dissappointment. I base my investment decisions on who’s managing the money. If you have a good money manager who makes you money then fees are irrelevant. Do some research and see how each fund stacks up as far as historical returns. I think you will find that the ones which may have higher fees also have higher returns. Of course you should remember that “past performance is no indication of future returns.”

Basing your purchasing decision on fees I feel is flawed logic. But do as you wish.

You are quite correct that basing the purchase on fees alone would probably not be a wise thing. As I indicated earlier, there were other considerations for me. As I was poking around, there didn’t seem to be any funds which could be obtained only through a broker, so I saw no point in paying broker fees. But here again I wasn’t able to look at the New Mexico plan so I really don’t know. I’ll check it out, though. Thanks for the heads up on it.

You should at least consider using your state’s plan–contributions may be deductible on your state income tax return.