New York State Comptroller Thomas DiNapoli announced earlier this week that his office would reduce fees associated with the state’s 529 College Savings Program Direct Plan. The cuts make New York with one of the lowest cost college savings plans in the country. The Direct Plan’s total annual asset-based fee is nearly cut in half, declining from 0.49% to 0.25%, across the plan’s entire lineup of Vanguard investment options. This reduction, effective August 29, 2010, could result in savings of nearly $20 million dollars annually for plan participants.
“Family budgets are getting tighter, but families still need to save for college,” DiNapoli said in a statement. “The 529 Plan is a low-cost, easy-to-use program that helps make college more accessible to New Yorkers. And now the cost is one of the lowest in the nation. When you’re saving for college, every dime counts. The lower cost should be even more of an incentive for New York families to prioritize saving.”
The announcement marks the fifth time in five years that the Comptroller’s Office has worked with investment manager Vanguard and program manager Upromise Investments to reduce expenses for plan investors.
According to DiNapoli, the plan’s all-in low costs are a result of economies of scale realized by the plan’s long-term asset growth, low cost investment options, and operating efficiencies generated from improvements in technology and client service by Vanguard and Upromise Investments.