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Strategies & Market Trends : College Savings Plans and Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Original Mad Dog who wrote (14)	7/9/2002 10:17:31 PM
From: Original Mad Dog	Read Replies (2) \| Respond to of 19

usatoday.com States with high-achieving plans By Sandra Block, USA TODAY The College Savings Plan of Nebraska won top honors in USA TODAY's analysis of 43 plans nationwide. Other high achievers included Virginia's CollegeAmerica and plans from Michigan, Tennessee and Minnesota. All of the top plans share one characteristic: below-average fees and expenses. In a bear market, that's critical, analysts say. While you can't predict a plan's future performance, "the one thing you do know is that expenses will take a bite" out of your returns, says Peter Di Teresa, an analyst at fund tracker Morningstar. Nebraska's plan includes a mix from six mutual fund companies, including Fidelity, Vanguard and T. Rowe Price. The plan is available to investors who buy direct or through a financial adviser. And its mutual funds charge below-average management fees. Among other top performers: Virginia CollegeAmerica, an adviser-sold plan managed by the American Funds. Investors pay a sales commission, but management expenses are below average, and American funds have a history of steady returns. Michigan Education Savings Program, a direct-sold plan managed by TIAA-CREF. The plan won points for its low fees, generous state tax deduction (up to $10,000 a year for married couples) and above-average performance. Tennessee Baccalaureate Education Savings Trust, also managed by TIAA-CREF, scored high for its low minimums and above-average returns. Minnesota College Savings Plan, managed by TIAA-CREF, features low expenses and matching grants for low-income residents. Performance varied widely among plans. Many use an age-based system. The younger the child, the higher the percentage of stocks in the portfolio. In Colorado's plan, for instance, children ages 1 to 3 took a 7.8% loss for 2001. The portfolio is 80% stocks and 20% bonds. Because every family's situation is different, the rankings are just a starting point. Some plans lost points because they require an above-average minimum investment or offer limited investment options. Plans that may appeal to particular groups: Wealthy grandparents. Virginia's plans permit families to invest up to $250,000. And Virginia residents age 70 or older can deduct all of their contributions from state income taxes. Well-off grandparents may also want to check out Rhode Island's CollegeBound fund, which allows contributors to save up to $265,620. Low-cost investors. Utah's Educational Savings plan earns high marks from some financial advisers who like its low annual fees. Utah's age-based portfolio is made up of Vanguard low-cost index funds. Annual expenses are about 0.35%, vs. an average expense ratio of about 1.15%. Active investors. In response to complaints that many age-based portfolios are too conservative, several plans allow more aggressive options. Ohio's CollegeAdvantage plan, managed by Putnam Investments, is one of the most ambitious. Putnam offers four fund portfolios combining stock and bond funds. But investors who want to create their own portfolios can choose among 10 individual Putnam stock and bond funds. Cash-strapped families. Many parents of young children don't have a lot of extra cash. All TIAA-CREF plans let families start investing for as little as $25. Minnesota's and Michigan's plans offer matching grants for participants who meet income criteria.