DiNapoli Announces Expense Reduction
For State's 529 College Savings Plan
New York State Comptroller Thomas P. DiNapoli today announced a significant expense reduction in the state's 529 College Savings Program Direct Plan, providing New Yorkers with one of the lowest cost college savings plans in the country. The Direct Plan's total annual asset-based fee is nearly cut in half, declining from 0.49% to 0.25%, across the plan's entire lineup of Vanguard investment options. This reduction, effective August 29, 2010, could result in savings of nearly $20 million dollars annually for plan participants.
"Family budgets are getting tighter, but families still need to save for college," DiNapoli said. "The 529 Plan is a low-cost, easy-to-use program that helps make college more accessible to New Yorkers. And now the cost is one of the lowest in the nation. When you're saving for college, every dime counts. The lower cost should be even more of an incentive for New York families to prioritize saving."
Today's announcement marks the fifth time in five years that the Comptroller's Office has worked with investment manager Vanguard and program manager Upromise Investments to reduce expenses for plan investors.
The plan's all-in low costs are a result of economies of scale realized by the plan's long-term asset growth, low cost investment options, and operating efficiencies generated from improvements in technology and client service by Vanguard and Upromise Investments.
"Vanguard is pleased to help lower costs for investors in the New York 529 direct plan because we understand how much costs matter. Vanguard has a history of lowering expenses for 529 participants as assets in plans invested in our funds have grown," said Vanguard Chairman and CEO Bill McNabb.
"Upromise Investments, along with Vanguard, shares in Comptroller DiNapoli's commitment to helping New York families effectively invest and save for college," said Jeff Howkins, President of Upromise Investments, program manager of New York's 529 College Savings Program Direct Plan. "Today's reduction in fees furthers that commitment and opens more doors for Direct Plan account holders."
New York's 529 College Savings Program Direct Plan is the nation's largest direct-sold college savings program, with more than $8 billion invested in more than 500,000 accounts. The plan offers 16 low-cost investment portfolios from Vanguard, including three professionally managed age-based options. The New York 529 also enables families to establish accounts with as little as $25, making it an affordable savings vehicle for families at all income levels. It also provides a number of benefits for families saving for college, including tax-free withdrawals when used for qualified higher-education expenses*. A New York State taxpayer who is also the account owner may also be eligible for a deduction from New York State taxable income of up to $5,000 (or $10,000 for married couples filing jointly).