Families saving for college will benefit from changes to the contract governing the state’s Bright Directions 529 college savings plan.
The newly negotiated contract eliminates set-up and maintenance fees for families saving for college through Bright Directions. The elimination of the $10 set-up fee and $3 quarterly maintenance fee means more investment dollars will go to college savings. Management fees also will be slashed by 43 percent. More than 104,000 accounts will benefit from the new terms, which take effect Nov. 15.
Independent rating agencies recognize Bright Directions as a solid investment with a competitive price that offers 55 investment options. The new fee structure is a result of negotiations with Union Bank, which was selected to manage the fund through a competitively bid process.
In addition to Bright Directions, Frerichs’ office manages the Bright Start Advisor and Bright Start Direct college savings programs. Like Bright Directions, these plans are qualified tuition programs under Section 529 of the Internal Revenue Code, which allows individuals to invest in higher education without paying taxes on earnings. Earnings can be spent on qualified expenses at eligible educational institutions, including public and private schools, two-year and four-year colleges and universities, and certain technical and vocational schools.
Currently, more than 400,000 residents hold a Bright Directions or Bright Start account.