Springfield, MO

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Costs for state's college savings plan drop

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Though the snow led to the cancellation of a planned visit to Missouri State University yesterday, Missouri Treasurer Clint Zweifel has announced a cost-saving new management agreement for Missouri’s 529 college savings plan, also known as MOST.

According to a news release from Zweifel’s office, a five-year agreement with Newton, Mass.-based Upromise Investments is expected to save plan investors $18.5 million during the length of the agreement, making the state’s plan the fifth least-expensive in the nation.

Costs for do-it-yourself MOST plan participants are expected to drop 44 percent, the release said, while participants who prefer to participate through an adviser should not see any cost increases, and 27 percent of those participants should see cost decreases.

“Lower costs and only $25 to open an account increases access to affordable higher education – whether a four-year, two-year or technical school,” Zweifel said in the release. “Missourians will save millions of dollars and Upromise is showing its commitment to our state.”

The cost cutting and financial assistance comes as a result of a competitive bid administered by the Missouri Higher Education Savings Program Board, which governs the direct-sold and adviser-sold MOST 529 plans. Zweifel is chairman of the board, which on Feb. 7 voted unanimously to have Upromise continue as program manager of both types of plans. The latest agreement will expire June 6, 2016.

According to the release, 113,000 account owners have invested $1.47 billion with the direct-sold MOST 529 Plan, and there are 13,500 accounts with more than $133 million invested through the adviser-sold plans.

The direct-sold MOST 529 Plan offers low-cost Vanguard investments, including three age-based options, 10 index-based portfolios and four actively managed portfolios. Costs will range from 0.29 percent to 0.38 percent for age-based and index-based options, down from a previous cost of 0.55 percent. Costs for actively managed portfolios will range 0.53 percent to 0.6 percent, down from 0.87 percent to 1.58 percent.

Participants in the adviser-sold plans have expanded options available through DWS Investments, with access to other investment vehicles such as American Century, Franklin Templeton and T. Rowe Price, and the Scout International Terror-Free portfolio from UMB Bank.

As a result of the new management contract and changes to some underlying funds in the direct- and adviser-sold funds, some account owners will be directed into portfolios unless they choose their own in advance. Account owners should expect to receive formal communication about the changes before June, the release said.

Zweifel also announced a $500,000 financial assistance package for the college savings plan, with details to be announced at a later date.[[In-content Ad]]


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