Morningstar’s analysts today released rankings evaluating 59 of the nation’s most prominent 529 college savings plans, covering more than 90% of industry assets. The elite “Gold Medalist” rating went to plans from just five states: Alaska, Illinois, Massachusetts, Pennsylvania, and Utah.
These plans were singled out for offering “exceptional state stewardship of investor capital and well-constructed portfolios managed by competent investment teams,” according to a Morningstar post today announcing the new ratings.
Morningstar analysts annually assign forward-looking, qualitative ratings to 529 education savings plans based on its assessment of each plan’s investment merits relative to its peers. Just 31 plans out of the 59 earned Morningstar Medalist Ratings of Gold, Silver, or Bronze.
Beyond the five Gold ratings, 13 plans earned Silver ratings, including advisor-sold plans offered by Ohio and Virginia. (Advisor-sold 529 plans tend to be more expensive and experience a higher hurdle for Medalist Ratings.) Another 13 state 529 plans earned Bronze ratings.
Morningstar’s report noted that the 31 plans earning Gold, Silver, or Bronze Medalist Ratings should be well-positioned for the future and exhibit some combination of the following attractive features:
• A well-researched asset-allocation approach
• A robust process for selecting and monitoring underlying investments
• A well-resourced and experienced investment team
• Stable and engaged oversight from the state
• Low fees
Most plans retained their Medalist Ratings from the previous year. One plan—Illinois’ Bright Directions advisor-sold plan—was upgraded, and three were downgraded.
The Gold Standard
Notably, all five of this year’s Gold Medalist plans also earned Gold ratings in 2024 and continue to offer exceptional state stewardship of investor capital and well-constructed portfolios managed by competent investment teams, the report states.
Here’s a closer look at the five, as described in the Morningstar report:
• Alaska’s T. Rowe Price College Savings Plan taps an industry-leading multi-asset investment team at T. Rowe Price that follows a robust and research-driven approach to education savings. Although the Education Trust of Alaska’s unusually long contract with T. Rowe Price (expires in 2045) isn’t best practice, the trust otherwise provides strong oversight and partnership with T. Rowe Price to continually improve the plan.
• Illinois’ Bright Start Direct-Sold College Savings Plan offers compelling investment options that are also highly cost-effective. Notably, the state offers a wide range of high-quality investment options across multiple firms, compared with some peers whose offerings are restricted to a single asset manager. Its investment manager, TIAA-CREF, is spread thin relative to its growth, but the state’s investment team keeps a close watch on the portfolios and effectively negotiates better terms for its participants.
• Massachusetts’ U.Fund College Investing Plan features a well-resourced investment team at Fidelity. It notably offers enrollment portfolios in three different flavors: all actively managed, all-passive, and blend. All three are thoughtfully constructed, and the rest of the investment menu has several high-quality options. While four other states offer similar plans managed by Fidelity, the state of Massachusetts stands out with its scrupulous oversight and continuous, effective engagement with the firm.
• The Pennsylvania 529 Investment Plan continues to benefit from its topnotch state oversight. The Pennsylvania Treasury Department has built an impressive record of effective governance, including a successful negotiation with its investment manager and program manager that will lead to accelerated fee reductions as the plan’s assets grow. Its well-defined plans for career development and succession planning help future-proof the oversight process and ensure continuity.
• On top of its well-diversified, cost-effective enrollment year portfolios, Utah’s my529 plan continues to offer its unique, custom age-based portfolios that allow investors to build their own glide paths using Vanguard and DFA funds. While the custom options can be misused, the my529 team has placed guardrails and behavioral nudges to steer investors away from overly expensive or niche portfolios.
Check out the Morningstar 529 Report for more detailed information as well as the full list of states earning Silver and Bronze ratings.
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• Americans Oblivious to 529 Plan Benefits