13 Best & Worst 529 College Savings Plans of 2014: Morningstar

ThinkAdvisor whittled down Morningstar’s look at 84 college investment plans to see which ones do it right — and wrong

With college costs ever rising, parents are always looking for ways to make sure they have enough money put away so their kids can get an education.

One way to do that is to invest in 529 plans, where the gains on the plan’s investments are tax free when used for qualified educational purposes.

529 plans were added to the IRS code more than 10 years ago, with assets in 84 plans nationwide now totaling $200 billion. In 2013, the plans grew 20% over the prior year.

Morningstar recently released an industry report on the 84 plans, including direct-sold and advisor-sold plans, with the total of 529 plans split nearly evenly between the two types. Each was assigned to the Gold, Silver, Bronze or Negative category.

The plans were ranked in these five areas: Process, Performance, Price, Parent and People. To get rated as Gold, for example, Morningstar says the plans must meet the “highest-conviction recommendations and stand out as best of breed for their ability to help college savers meet their goals.”

(Related: 30 Best Paying College Majors: 2014)

We’ve listed the plans that merited the top two ratings and those that were deemed to be at the bottom. Of course, the vast majority received a Neutral rating.

We’ve included the rankings by state in terms of 529-plan assets under management. Virginia, with more than $46 billion in assets under management, has by the far the highest level of assets when it comes to college savings.

Check out the Best and Worst 529 College Savings Plans:

THE BEST 529 COLLEGE PLANS

Johns Hopkins University in Baltimore, Md.

1. Maryland College Investment Plan Direct

Rating: Gold

Program Manager: T. Rowe Price

State’s Total 529 AUM: $3.8 billion/Rank: 18th

2. T. Rowe Price College Savings Plan Direct – Alaska

Rating: Gold

Program Manager: T. Rowe Price

State’s Total 529 AUM: $6.07 billion/Rank: 10th

Bill McNabb, CEO and Chairman of Vanguard.

3. The Vanguard 529 College Savings Plan Direct – Nevada

Rating: Gold

Program Manager: UPromise Investments

State’s Total 529 AUM: $12.7 billion/Rank: 3rd

4. Utah Educational Savings Plan Direct

Rating: Gold

Program Manager: Utah Educational Savings Plan

State’s Total 529 AUM: $6.7 billion/Rank: 7th

Cincinnati Skyline with Replica Steamboat in Ohio River.

5. CollegeAdvantage 529 Savings Plan Direct – Ohio

Rating: Silver

Program Manager: Ohio Tuition Trust Authority

State’s Total AUM: $7.7 billion/Rank: 5th

University of Virginia Campus

6. CollegeAmerica Advisor – Virginia

Rating: Silver

Program Manager: American Funds

State’s Total AUM: $46.7 billion/Rank: 1st

Aerial view of Little Rock. (Photo: AP)

7. iShares 529 Plan Advisor – Arkansas

Program Manager: UPromise Investments

State’s Total AUM: $485.5 million /Rank: 36th

8. Michigan Education Savings Program Direct

Rating: Silver

Program Manager: TIAA Tuition Financing

State’s Total AUM: $3.9 billion/Rank: 14th

Sproul Hall at the University of California Berkeley (Photo: AP)

9. ScholarShare College Savings Plan Direct – California

Rating: Silver

Program Manager: TIAA Tuition Financing

State’s Total AUM: $5.5 billion/11th

THE WORST 529 COLLEGE PLANS

Castle Hill Lighthouse in Newport, RI.

10. CollegeBound Fund Advisor – Rhode Island

Rating: Negative

Program Manager: AllianceBernstein

State’s Total AUM: $7.7. billion/Rank: 6th

11. CollegeBound Fund Direct – Rhode Island

Rating: Negative

Program Manager: AllianceBernstein

State’s Total AUM: $7.7. billion/Rank: 6th

University of Minnesota marching band. (Photo: AP)

12. Minnesota Savings Plan Direct

Rating: Negative

Program Manager: TIAA Tuition Financing

State’s Total AUM: $1.1 billion/Rank: 33rd

Schwab Office Sign (Photo: AP)

13. Schwab 529 College Savings Plan Direct – Kansas

Rating: Negative

Program Manager: American Century

State’s Total AUM: $4.2 billion/Rank: 13th

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