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New York Cuts Fees for College Savings Plan by Almost 50% to Aid Families
New Yorkers who participate in the state’s 529 college savings direct plan will see fees cut by almost 50 percent, New York State Comptroller Thomas DiNapoli said.
The direct plan’s total annual asset-based fee declined to 0.25 percent from 0.49 percent starting Aug. 29, according to a statement today from the comptroller’s office. The reduction could result in savings of almost $20 million annually for plan participants.
“Family budgets are getting tighter, but families still need to save for college,” DiNapoli said in the statement. “When you’re saving for college, every dime counts.”
The reduced cost means New York’s fees are among the lowest for directly sold 529 plans, said Laura Pavlenko Lutton, editorial director in the fund research group at Chicago-based Morningstar Inc. The New York plan offers investors 16 investment choices from Vanguard including three that change the investment mix as beneficiaries near college. Account fees for age-based options, which are the most popular nationwide, range from 0.20 percent to as high as 2.27 percent, Lutton said.
‘Pressure on Fees’
“There’s pressure on fees, which is a great thing for parents and grandparents investing in 529 plans because that’s more of your nest egg that you get to keep,” she said.
Fidelity Investments, based in Boston, lowered fees on its 529 plans in December and Baltimore-based T. Rowe Price Group Inc. did the same in July, indicating a trend, Lutton said.
The Vanguard Group, based in Valley Forge, Pennsylvania, is the investment manager for New York’s 529 college savings direct plan and Newton, Massachusetts-based Upromise Investments Inc. is the program manager. The plan is the nation’s largest college savings program directly sold to investors with more than $8 billion invested in about 500,000 accounts, the statement said. Assets in 529 plans nationwide totaled about $117 billion as of March, according to Morningstar.
To contact the reporters on this story: Alexis Leondis in New York aleondis@bloomberg.net. Margaret Collins in New York at mcollins45@bloomberg.net.
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