Going to college in New York state is getting a little bit more affordable. New York’s 529 College Savings Program announced Wednesday its plan to cut its fees in half.
The fees on the account are now 0.25%, down from 0.49%, according to The New York Times. New York’s state-funded investment package, which is the largest in the country, now has rates that place it among the lowest in the nation. Average fee rates on college 529 plans in states across the country typically range from 0.40% to 0.60%. The rate decrease was the fifth in five years for investors. When the state of New York aligned in 2003 with Vanguard and UPromise to issue the investment packages, the rate was 0.60%, meaning investors are paying about 42% of what they would have paid seven years ago.
What is a College 529 Plan
The variety of 529 discussed above is a state-run investment package provided to help parents build savings for their kids’ college education.
To get started with a 529, you purchase the investment plan directly through the state. The packages are similar to 401(K)s in that they are safe investments that you put money into and hope for strong return over a number of years. The main benefit of college 529 plans is the fact that you can withdraw your earnings tax-free. You are required to use the funds for education-related purposes, and can only use them at state-run schools in the state in which you purchase the 529 plan. Private college 529 plans are also available through banks and other investment firms. The private plans are much more restrictive about which schools you can use the funds at.
Click here for a complete walk-through of 529 plans and tips on how to use them.