Best 529 Plans

How to save for college tuition

We publish unbiased reviews; our opinions are our own and are not influenced by payments from advertisers. Learn about our independent review process and partners in our advertiser disclosure.

A 529 plan is a way to save money to pay for a student’s future higher education costs (e.g., tuition and mandatory fees) while taking advantage of potential tax savings. There are two primary types of 529 plans, an education savings plan (aka, a college savings plan) and a prepaid tuition plan. With both types of 529 plans, the invested funds must be used to pay for qualified costs incurred by a specific student when they attend college in the future. This is different from a normal savings account, where the funds can be used for any purpose.

To find the best 529 plans, we researched several dozen options to understand how much they cost, the available investment options and returns, and more. Keep reading to learn more about which one might be best for you.  

Best 529 Plans for 2021

Best Overall : Michigan Education Savings Program


Michigan Education Savings Program

 Michigan Education Savings Program

Why We Chose It: We chose the Michigan Education Savings Program as the overall best 529 plan because it is available nationwide with some of the lowest fees we found and has a high maximum contribution limit of $500,000. Plus, you can choose from a wide variety of investment options, average annual returns since inception compares favorably to the other 529 plans we reviewed, and it received the highest-possible Gold analyst rating from Morningstar.

What We Like
  • No state residency requirements

  • Gold analyst rating from Morningstar

  • Maximum contribution limits of $500,000

  • Low annual asset-based fees ranging from 0% to 0.135%

  • No application fees

What We Don't Like
  • Minimum investment of $25 required

  • No FDIC-insured option

  • Phone assistance unavailable on weekends

The Michigan Education Savings Program (MESP) offers a 529 plan to people throughout the United States to save up to $500,000 for a future student to pay for college. With this 529 plan, you won’t pay application, cancellation, change-in-beneficiary, or change-in-investment-option fees. Plus, as of this writing, the annual asset-based fees ranged from 0% to 0.135%. All of these factors contributed to our selection of MESP as the overall best 529 plan.

Not only are the fees for the MESP 529 plan low, but there are many investment options to meet different investor risk tolerances. This includes enrollment year investment options where the portfolio risk decreases as the expected college enrollment date approaches, single and multi-fund investment options with higher-level risk tolerances, and guaranteed investment options for people with lower risk tolerances. There aren’t any FDIC-insured options (e.g., certificates of deposit), which is a drawback.

As of February 2021, the MESP 529 plan had an average annual compound rate of total return since inception ranging from 1.46% to 15.83% for its portfolios in existence for more than one year, with cumulative non-annualized returns up to 22.37% for its portfolios in existence for less than a year (the oldest portfolio inception date is from November 2000 and the newest is from June 2020). 

The MESP has a top-tier Gold analyst rating from Morningstar. You can sign up for a 529 plan online with an initial investment of $25 and, once enrolled, you can manage your account and investments online. 

You can reach the MESP team by phone at 1-877-861-6377 from 8:00 a.m. to 8:00 p.m. (EST) Monday through Friday.

Best for Performance : Oregon College Savings Plan


Oregon College Savings Plan

 Oregon College Savings Plan

Why We Chose It: We chose the Oregon College Savings Plan as the 529 plan best for performance because it has a Silver analyst rating from Morningstar, its most recently reported returns since inception on its investment portfolios are in a competitive range of 1.16% to 21.98%, and it offers an FDIC-insured option for investors with lower risk tolerances.

What We Like
  • No state residency requirements

  • Silver analyst rating from Morningstar

  • FDIC-insured investment options available

  • Competitive historical performance

What We Don't Like
  • Minimum investment of $25 required

  • Maximum contributions limits of $400,000

  • Annual asset-based fees ranging from 0.25% to 0.72%

  • Various service-based fees (e.g., $25 for rollovers)

  • Oldest portfolio inception date is September 2018

The Oregon College Savings Plan offers a 529 plan to people throughout the United States so they can save up to $400,000 for a student to pay for college. We chose the Oregon College Savings Plan as the 529 plan best for performance because, although it’s a newer education savings plan, its most recently reported returns since inception are in a competitive range and it has a Silver analyst rating from Morningstar.

With the Oregon College Savings Plan, you can choose from multiple enrollment years and static investment portfolios to best fit your desired risk tolerance. Unlike some of the other 529 plans we reviewed, the Oregon College Savings Plan also offers an FDIC-insured option for investors who want to protect their investments from losses. 

One of the drawbacks to the Oregon College Savings Plan is the cost, which carries total annual asset-based fees ranging from 0.25% to 0.466%. There are also various service-based fees (e.g., $25 for rollovers). 

You can sign up for a 529 plan online in about 15 minutes with an initial investment of $25. Once your account is established, you can make some changes online (e.g., automatic contributions), but for other actions like closing your account, you’ll need to call its customer service team at 1-866-772-8464 between the hours of 6:00 a.m. and 5:00 p.m. (PST) Monday through Friday.

Best for Low Fees : ScholarShare 529 College Savings Plan


ScholarShare 529 College Savings Plan

ScholarShare 529 College Savings Plan

Why We Chose It: ScholarShare 529 College Savings Plan is the 529 plan best for low fees because you won’t pay any application, cancellation, change-in-beneficiary, or change-in-investment-portfolio fees. There are also no sales charges, commissions, or transfer fees. Plus, its total annual asset-based fees are reasonable at a range of 0% to 0.53%.

What We Like
  • No state residency requirements

  • Silver analyst rating from Morningstar

  • Low annual asset-based fees ranging from 0% to 0.53%

  • Maximum contribution limit of $529,000

What We Don't Like
  • No FDIC-insured options

  • Phone assistance unavailable on weekends

ScholarShare 529 College Savings Plan is based in California and offers a 529 plan to people across the United States to invest up to $529,000 to pay for a student to go to college in the future. We chose the ScholarShare College Savings Plan as the 529 plan best for low fees because there are no application, cancellation, and maintenance fees. Plus, its total annual asset-based fees are low, at a range of 0% to 0.53%. 

You can choose from a variety of investment options with ScholarShare 529. These include enrollment year, guaranteed, multi-fund, and single-fund investment portfolios. As of December 2020, the average annual compound rate of total return since inception ranged from 1.39% to 14.64% for its portfolios in existence for more than one year. Unfortunately, there isn’t an FDIC-insured option, which may be a drawback for individuals looking for this type of protection against losses. 

The ScholarShare 529 College Savings Plan has a Silver analyst rating from Morningstar. It’s easy to apply for and maintains your 529 plan online, and ScholarShare 529’s customer service team is available by phone at 1-800-544-5248 from 8:00 a.m. to 7:00 p.m. (PST) Monday through Friday.

Best for Customized Investments : my529


my529

my529

Why We Chose It: We chose my529 as the 529 plan best for customized investments because, in addition to offering a variety of age-based and static investment options, my529 also offers two customizable investment options.

What We Like
  • No state residency requirements

  • Gold analyst rating from Morningstar

  • Maximum contribution limit of $510,000

  • FDIC-insured investment options available

  • No operating expense ratio fee for FDIC-insured accounts

What We Don't Like
  • Phone assistance unavailable on weekends

  • Carries an operating expense fee and an administrative fee

The Utah-based my529 offers education savings 529 plans to people throughout the United States so they can save up to $510,000 for a student to pay for college in the future. Not only can you choose from four age-based and seven static investment options (with FDIC-insured options available), but my529 also offers two customizable investment options, making it our choice for best for customized investments. 

You’ll pay two sets of fees with my529, an operating expense ratio fee for your investment ranging from 0% to 0.330% and an annual administrative fee ranging from 0.10% to 0.15%. When we checked, the historical average annualized returns since inception on the my529 investment plans ranged from 0.77% to 16.68%. 

My529 has a top-tier Gold analyst rating from Morningstar. You can sign up for a 529 plan, manage your account, and contribute online with my529. 

If you need help, you can reach the my529 customer service team by phone at 1-800-418-2551 from 7:00 a.m. to 6:00 p.m. (MST) Monday through Friday.

Best for Variety of Investment Choices : Bright Start College Savings Program


Bright Start College Savings Program

Bright Start College Savings Program 

Why We Chose It: Bright Start College Savings Program is the 529 plan that’s best for various investment options because you can choose from a variety of age-based, individual fund, and target investment portfolios with 11 well-respected fund families, including Vanguard and T. Rowe Price.

What We Like
  • No state residency requirements

  • Gold analyst rating from Morningstar

  • Investment options from 11 well-respected fund families

What We Don't Like
  • No FDIC-insured options

  • Phone assistance unavailable on weekends

  • Maximum contribution limit of $450,000

Bright Start College Savings Program is a 529 plan from Illinois that allows people from all over the United States to save up to $450,000 to pay for a future student to attend college. It offers a wide variety of investment options, including age-based, target, and individual fund portfolios, to enable you to build an investment that best fits your preferences and appetite for risk, making it our choice as the 529 best for various investment choices. 

The operating expense ratio fee charged by Bright Start College Savings Program for its 529 plans ranges from 0.10% to 0.83% (inclusive of an administrative program management fee of 0.08% and a state fee ranging from nothing to 0.03%). The lifetime average annual total returns since inception ranged from 1.24% to 23.12% as of this writing. 

One of the drawbacks is that there are no FDIC-insured options. However, the Bright Start College Savings program has a top-tier Gold analyst rating from Morningstar. Plus, you can open and manage your account online. 

If you need to speak with a customer service representative by phone, you can call 1-877-432-7444 between the hours of 7:00 a.m. and 7:00 p.m. (CST) Monday through Friday.

Best for FDIC Backing : Invest529


Invest529

 Invest529

Why We Chose It: We chose Invest529 as the 529 plan best for FDIC backing because one of the principal-protected portfolios it offers is FDIC-insured, a great option for individuals who want extra protection against losses.

What We Like
  • No state residency requirements

  • Gold analyst rating from Morningstar

  • FDIC-insured investment options available

What We Don't Like
  • Phone assistance unavailable on weekends

  • Various service-based fees (e.g., $50 for a paper application)

Invest529 is offered by Virginia529 and allows people from all across the United States to invest up to $500,000 for a future student to use to pay for a college degree. It’s our choice as the best plan for FDIC backing because it offers a diverse mix of investment plans, including an FDIC-insured option for individuals who want to protect themselves against the potential for losses. 

If you choose to get an Invest529 education savings plan, you can expect to pay asset-based fees ranging from 0.09% to 0.62% (inclusive of an annual 0.09% administrative fee). Although there are no charges for online applications and changes to your investment strategies, you will have to pay some service fees (e.g., $25 for rollovers and $50 for paper applications). 

The historic annualized total returns since inception for portfolios in existence for more than one year with Invest529 ranged from 3.17% to 14.84% as of this writing (some of these portfolio inception dates go back as far as the early 2000s). 

Morningstar gave Invest529 a Gold analyst rating. You can easily open and manage your Invest529 education savings plan online. 

If you want to speak to a customer service agent, you can reach Invest529 by phone at 1-888-567-0540 between the hours of 9:00 a.m. and 4:30 p.m. (EST) Monday through Friday.

Best for Prepaid Plans : Private College 529 Plan


Private College 529 Plan

Private College 529 Plan 

Why We Chose It: The Private College 529 Plan is best for prepaid plans because you can prepay and lock in your tuition rates with nearly 300 colleges and universities located throughout the United States, including Alaska and Hawaii, with no fees.

What We Like
  • No state residency requirements

  • Lock in tuition rates with nearly 300 colleges and universities through the U.S.

  • No financial market risk

  • No fees associated with the plan

What We Don't Like
  • Can only be used for approved colleges

  • Maximum contribution limit of $305,500

  • Prepaid tuition is not guaranteed by the FDIC or any other government agency

Our choice for best prepaid plans, Private College 529 Plan, offers a prepaid tuition 529 plan that can be used to prepay up to $305,500 for a future student’s tuition. It’s backed by a consortium of nearly 300 private colleges and universities located across the United States, including Alaska and Hawaii. Plus, you won’t pay any fees for the Private College 529 Plan. 

What you’ll get from the Private College 529 Plan is different from the other 529 plans on our list because it’s a prepaid tuition plan rather than an education savings plan. With an education savings plan, your investment’s value can increase or decrease with financial market changes whereas, with a prepaid plan, you prepay for tuition at a select college (or group of colleges). You’ll get a tuition certificate that locks in your future student’s tuition rates at the current prices. 

Although the schools participating in the Private College 529 Plan consortium provide a guarantee that they’ll honor your tuition certificate, there is no guarantee against losses provided by the FDIC or any other government agency. 

You can sign up for the Private College 529 Plan online, as well as manage your account online. 

If you need additional help, you can speak with a customer service agent on the phone by calling 1-888-718-7878 between the hours of 9:00 a.m. and 8:00 p.m. (EST) Monday through Friday.

Final Verdict

Final Verdict

We researched dozens of 529 plans to find the ones that can meet various investment needs at an affordable rate. The best 529 plans are available throughout the United States and although not every 529 plan offers an FDIC-insured option to protect against losses, there are investments designed to meet various risk tolerances. You can even prepay your tuition to lock-in future rates and avoid the financial market’s volatility altogether.

Although the 529 plan that’s best for you will depend on your specific goals, we think the Michigan Education Savings Program is the 529 plan that will meet most people’s needs. Not only does it have an excellent Gold analyst rating from Morningstar, but it’s available to people throughout the United States, carries low fees, and allows contributions up to $500,000.

FAQs

What Is a 529 Plan?

A 529 plan is an investment that allows you to save for future college expenses while also taking advantage of tax savings. These plans allow you to either prepay tuition or purchase an investment that’s designated for college expenses. This type of plan is different from a traditional savings or investment account because the funds must be used only by the designated beneficiary for qualified education expenses related to their higher education. 

How Do 529 Plans Work?

There are two types of 529 plans that allow you to make contributions in different ways, namely prepaid tuition plans and education savings plans. A prepaid tuition plan allows you to purchase your tuition in advance, locking in the tuition cost at the current rates. An education savings plan allows you to save funds in an investment account for a future student (beneficiary) to use to pay for eligible higher education expenses (for example, tuition and mandatory fees).

Since a 529 plan is a type of investment plan, your return may vary depending on the characteristics of the investment and other factors. Additionally, historical returns are not necessarily indicative of how an investment will perform in the future, and it’s always a good idea to consult with a financial advisor before making an investment decision. 

Who Should Get a 529 Plan?

Anyone who wants to save for future college expenses and take advantage of potential tax savings should consider getting a 529 plan. Before you invest, make sure you’re willing to keep the funds in the account for the long run, as you may be charged fees if you need to make an early withdrawal. Plus, consider the impact it might have on your financial aid eligibility since a 529 plan may affect the ability of a student to qualify for financial aid based on need.

Can I Only Choose a 529 Plan From My State?

Although 529 plans are available from every state as well as the District of Columbia, you don’t necessarily have to choose a 529 plan from your state. Most of the best 529 plans are available to people throughout the United States, regardless of where they live. Keep in mind, though, that 529 plans from your state might come with tax advantages that aren’t available with plans from outside your state. So, this is an important factor to consider when choosing a 529 plan.

How Much Does a 529 Plan Cost?

The cost of a 529 plan depends on the type of investment you choose and the level of risk you’re willing to accept. Some 529 plans will have no cost. Other plans will have asset-based fees ranging from a fraction of a percent to 0.75% or more. There could also be annual administrative fees of 0.25% or more, as well as fees for various services (e.g., application, cancellation, investment changes). 

Make sure to review your agreement to understand the total costs of the 529 plan before investing.

How We Chose the Best 529 Plans

We researched several dozen providers to find the best 529 plans. Our goal was to understand the types of investments available with each provider, the level of historical returns, each plan’s cost, and whether it’s possible to set up and maintain an account online with each provider. 

All of our top 529 plan choices are from reputable providers, are available nationally, and have Morningstar ratings of Gold or Silver. They carry affordable rates, a variety of investment options, and good historical returns. Plus, it’s possible to apply for and maintain your account online. Not only that, but the provider we selected for the best prepaid tuition plan includes a consortium of nearly 300 private colleges and universities located throughout the United States.

Article Sources

  1. Morningstar. "The Top 529 College Savings Plans of 2020." Accessed Mar. 31, 2021.