COLLEGE SAVINGS 101

Savingforcollege.com

Just released: Latest 529 plan 5-Cap Ratings
http://www.savingforcollege.com/articles/just-released--latest-529-plan-5-cap-ratings-1005

Posted: 2017-07-12

by Kathryn Flynn

Top-rated plans as of March 31, 2017

About the 5-Cap Ratings

In addition to our 529 Plan Performance Rankings, Savingforcollege.com also assigns a 5-Cap Rating to plans to help investors evaluate their college savings options. Each quarter, scores are assigned based on a variety of factors, which we separate into four categories: Performance, Costs, Features, and Reliability. There is also a "Resident Upgrade" score to reflect any additional benefits offered to residents of the plan's sponsoring state. Ratings for advisor-sold plans assume that the higher cost structure is justified by the professional advice, due diligence and time savings a financial advisor can provide.

How it works

Each plan's category scores and the "Resident Upgrade" score are computed on a scale of 1 to 5. We use a weighted averaging algorithm to calculate the overall 5-Cap Rating. Each plan's category score and overall Rating are featured on its Plan Details page, so that individuals are able to weight each factor, such as historical investment performance, based on their own circumstances and preferences.

Separate scores are calculated for residents and non-residents of each sponsoring state, since many states offer special benefits for residents who invest in their 529 plans. In fact, over 30 states, including the District of Columbia, currently offer a state tax credit or deduction for 529 plan contributions.

It's important to note that while we do employ a mathematical formula to calculate these scores, a significant portion of our analysis is subjective, and the Rating does not assess every aspect of a 529 plan, its management, or future investment performance.

Click here for more information on how we calculate the Ratings.

Notes about the most recent rankings

Several plans are in the process of dramatic changes, including the DC 529 Plan transitioning from Calvert to Ascensus College Savings, and the announcement that the Illinois 529 plans will soon be consolidated into the Bright Start College Savings Program. Both the Rhode Island 529 plans are also approaching the one-year mark in terms of performance history, which will allow them to be ranked. Given that the aforementioned plans won their respective contracts due to their diverse lineup of investments and low fees, it would not be unexpected to see them receive strong ratings, though it is still too soon to tell.

Also note that several plans may have seen the “Reliability” component of their score decrease, though there were no changes in the plan. This is because one of the components of Reliability is the risk of plan upheaval, and as the contract expiration data approaches there is greater risk of changes in the plan.

Top-rated plans as of March 31, 2017

A plan with a Rating of 5 Caps offers outstanding flexibility, attractive investments, and additional economic benefits (such as generous tax incentives) that can offer a substantial boost in savings for some investors. There are few, if any, weaknesses in these programs. The plans listed below currently have a resident and/or non-resident rating of 5 Caps.

    Final Score
State Program Non-resident Resident
Alaska University of Alaska College Savings Plan 4.5 5
Colorado Direct Portfolio College Savings Plan 4 5
Colorado Scholars Choice College Savings Program 4.5 5
Illinois Bright Start College Savings Program -- Direct-sold Plan 4.5 5
Iowa College Savings Iowa 4.5 5
Maine NextGen College Investing Plan -- Client Direct Series 5 5
Michigan Michigan Education Savings Program 4.5 5
Nebraska Nebraska Education Savings Trust - Advisor College Savings Plan 4.5 5
Nebraska Nebraska Education Savings Trust - Direct College Savings Plan 4.5 5
New York New York's 529 College Savings Program -- Direct Plan 5 5
Ohio Ohio CollegeAdvantage 529 Savings Plan 5 5
South Carolina Future Scholar 529 College Savings Plan (Advisor-sold) 4.5 5
South Carolina Future Scholar 529 College Savings Plan (Direct-sold)   5
Utah Utah Educational Savings Plan (UESP) Trust 4.5 5
Virginia Virginia Education Savings Trust (VEST) 4.5 5
West Virginia SMART529 WV Direct 4.5 5
Wisconsin EdVest (Direct-sold) 4.5 5

Top-rated plans as of March 31, 2017

About the 5-Cap Ratings

In addition to our 529 Plan Performance Rankings, Savingforcollege.com also assigns a 5-Cap Rating to plans to help investors evaluate their college savings options. Each quarter, scores are assigned based on a variety of factors, which we separate into four categories: Performance, Costs, Features, and Reliability. There is also a "Resident Upgrade" score to reflect any additional benefits offered to residents of the plan's sponsoring state. Ratings for advisor-sold plans assume that the higher cost structure is justified by the professional advice, due diligence and time savings a financial advisor can provide.

How it works

Each plan's category scores and the "Resident Upgrade" score are computed on a scale of 1 to 5. We use a weighted averaging algorithm to calculate the overall 5-Cap Rating. Each plan's category score and overall Rating are featured on its Plan Details page, so that individuals are able to weight each factor, such as historical investment performance, based on their own circumstances and preferences.

Separate scores are calculated for residents and non-residents of each sponsoring state, since many states offer special benefits for residents who invest in their 529 plans. In fact, over 30 states, including the District of Columbia, currently offer a state tax credit or deduction for 529 plan contributions.

It's important to note that while we do employ a mathematical formula to calculate these scores, a significant portion of our analysis is subjective, and the Rating does not assess every aspect of a 529 plan, its management, or future investment performance.

Click here for more information on how we calculate the Ratings.

Notes about the most recent rankings

Several plans are in the process of dramatic changes, including the DC 529 Plan transitioning from Calvert to Ascensus College Savings, and the announcement that the Illinois 529 plans will soon be consolidated into the Bright Start College Savings Program. Both the Rhode Island 529 plans are also approaching the one-year mark in terms of performance history, which will allow them to be ranked. Given that the aforementioned plans won their respective contracts due to their diverse lineup of investments and low fees, it would not be unexpected to see them receive strong ratings, though it is still too soon to tell.

Also note that several plans may have seen the “Reliability” component of their score decrease, though there were no changes in the plan. This is because one of the components of Reliability is the risk of plan upheaval, and as the contract expiration data approaches there is greater risk of changes in the plan.

Top-rated plans as of March 31, 2017

A plan with a Rating of 5 Caps offers outstanding flexibility, attractive investments, and additional economic benefits (such as generous tax incentives) that can offer a substantial boost in savings for some investors. There are few, if any, weaknesses in these programs. The plans listed below currently have a resident and/or non-resident rating of 5 Caps.

    Final Score
State Program Non-resident Resident
Alaska University of Alaska College Savings Plan 4.5 5
Colorado Direct Portfolio College Savings Plan 4 5
Colorado Scholars Choice College Savings Program 4.5 5
Illinois Bright Start College Savings Program -- Direct-sold Plan 4.5 5
Iowa College Savings Iowa 4.5 5
Maine NextGen College Investing Plan -- Client Direct Series 5 5
Michigan Michigan Education Savings Program 4.5 5
Nebraska Nebraska Education Savings Trust - Advisor College Savings Plan 4.5 5
Nebraska Nebraska Education Savings Trust - Direct College Savings Plan 4.5 5
New York New York's 529 College Savings Program -- Direct Plan 5 5
Ohio Ohio CollegeAdvantage 529 Savings Plan 5 5
South Carolina Future Scholar 529 College Savings Plan (Advisor-sold) 4.5 5
South Carolina Future Scholar 529 College Savings Plan (Direct-sold)   5
Utah Utah Educational Savings Plan (UESP) Trust 4.5 5
Virginia Virginia Education Savings Trust (VEST) 4.5 5
West Virginia SMART529 WV Direct 4.5 5
Wisconsin EdVest (Direct-sold) 4.5 5
 

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