15 Lowest Cost 529 College Savings Plans

Savingforcollege.com has just released its Annual Fee Study on 529 plans, identifying the 15 lowest cost funds. All are funds sold directly to investors as opposed to the more expensive advisor-sold funds, but they are popular among fee-based advisors who are acting as fiduciaries.

Savingforcollege developed the list by comparing the lowest and highest 10-year expense totals for a $10,000 investment in all direct-sold 529 college savings plans, based on the cheapest and most expensive investment options in each.

The plans have traditionally been used to save for college on a tax-free basis, but starting this year they can also be used to finance private education from K-12. Earnings grow tax-free and distributions are tax free so long as they're used for qualified educational expenses. In some states, contributions are deductible from state income taxes, often even if the 529 fund receiving the contributions is based out of state.

The 15 plans highlighted by Savingforcollege.com are located across the country and offer an array of investment options, including portfolios based on a student's age that adjust accordingly as college enrollment looms closer, on risk appetite and on individual fund choices.

Most plans don't charge fees other than expense ratios for the funds or portfolios, which range from low single-digit basis points to as much as 1.2%, though most funds have expense ratios well below 50 basis points. In some cases, there is also a small program or account maintenance fee.

The following list includes the cost of a $10,000 investment over 10 years. Of the 15 plans, only three — from Louisiana, South Carolina and West Virginia — restrict contributions to state residents. Four — from New Hampshire, Massachusetts, Delaware and Arizona — are tied in their scores because their plans, all run by Fidelity Investments, charge identical fees.

— Related on ThinkAdvisor:

• Income Share Agreements: A Student Loan Alternative
• 7 Tips for Repaying Student Loans