Morningstar Releases Ratings for States’ 529 Plans

Only two received a gold rating among the 54 tax-advantaged education saving plans assessed.

Reported by Natalie Lin


Morningstar Inc. announced its 529 medalist ratings on Thursday, with only Utah’s my529 Plan and Pennsylvania’s Pennsylvania 529 Investment Plan receiving the top rating of “Gold.”

According to Morningstar, the medalist ratings indicate which plans are best suited to help investors reach their goals. The rating tiers include Gold, Silver, Bronze, Neutral and Negative. This year, when considering 529 plans, Morningstar analysts assigned two Gold ratings, 15 Silver ratings, 17 Bronze ratings, 16 Neutral ratings and four Negative ratings.

“Since we debuted our 529 ratings in 2012, we’ve been pleased with the overall improvement in the 529 industry, namely through more sophisticated investment approaches, increased state oversight and lower fees,” Hyunmin Kim, manager research analyst at Morningstar, said in a statement. “Rightly, asset managers no longer consider education savings plans as an afterthought. With the right plan, families can effectively save for education and even kickstart retirement plans.”

Morningstar rated 54 of the nation’s largest 529 college-savings plans, which represent more than 90% of the industry’s approximately $415 billion in 529 plan assets as of August 31. The firm assigns ratings in three steps: assess the opportunity to add value, score pillars and derive the rating.

Morningstar analysts found that the 34 plans earning Gold, Silver or Bronze ratings had some combination of the following valuable features:

  • Well-researched asset-allocation approach;
  • Robust process for selecting and monitoring underlying investments;
  • Well-resourced and experienced investment team;
  • Stable and engaged oversight from the state; and
  • Low fees.

In this year’s assessment, Morningstar analysts upgraded 10 plans and downgraded seven plans. The table below shows these changes:

Upgrades

(Distribution Channel)

State

Current Morningstar Medalist Rating

Previous Morningstar Medalist Rating

Pennsylvania 529 Investment Plan (Direct)

PA

Gold

Silver

AZ529, Arizona’s Education Savings Plan
(Direct)

AZ

Silver

Bronze

DE529 Education Savings Plan (Direct)

DE

Silver

Bronze

U.Fund College Investing Plan (Direct)

MA

Silver

Bronze

New York’s 529 Program (Direct)

NY

Silver

Bronze

CollegeAmerica (Advisor)

VA

Silver

Bronze

Invest529 (Direct)

VA

Silver

Bronze

NextGen College Investing Plan Direct (Direct)

ME

Bronze

Neutral

The Education Plan (Direct)

NM

Bronze

Neutral

NextGen College Investing Plan Select (Advisor)

ME

Neutral

Negative

Downgrades

(Distribution Channel)

State

Current Morningstar Medalist Rating

Previous Morningstar Medalist Rating

Michigan Education Savings Program (Direct)

MI

Silver

Gold

Oregon College Savings Plan (Direct)

OR

Bronze

Silver

MOST Missouri’s 529 Education Plan (Direct)

MO

Bronze

Silver

ScholarShare College Savings Plan (Direct)

CA

Bronze

Silver

CollegeChoice 529 Direct Savings Plan (Direct)

IN

Neutral

Bronze

Bloomwell 529 Education Savings Plan (Direct)

NE

Neutral

Bronze

CollegeBound 529 (Advisor)

RI

Negative

Neutral

 

Tags
529, 529 college savings plan, Morningstar,
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