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Best 529 Plans

How to Save for College Tuition

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A 529 plan is a method for saving to pay for a student’s higher education costs during their lifetime and obtaining potential tax savings while doing so. Education savings plans and prepaid tuition plans exist, both with tax advantages and different terms. The best 529 plans for students depend on where they live and the flexibility needed by the users.

The best plans offer low fees while providing good, reliable performance for the student. Some of these accounts provide customizable features to allow for contributors to achieve specific goals or needs. Some companies provide better access to more customized investment choices. 

Best 529 Plans for 2022

Best Overall : Michigan Education Savings Program


Michigan Education Savings Program

 Michigan Education Savings Program

  • Fees: 0.2%-0.185%
  • Availability: Nationwide
  • No. Investment Types: 4

Why We Chose It: Michigan Education Savings Program, a Morningstar Gold-analyst rated program, offers the best 529 plan due to its nationwide availability, low fees, variety of investment options, average annual returns, and high maximum contribution limit.

Pros
  • No state residency requirements

  • Maximum contribution limits of $500,000

  • Low annual asset-based fees ranging from 0.2% to 0.185%

  • No application or cancellation fees

Cons
  • Minimum investment of $25 required

  • No FDIC-insured option

  • No phone assistance on weekends

The Michigan Education Savings Program (MESP) offers a 529 plan to people throughout the United States to save up to $500,000 for a future student to pay for college. With this 529 plan, you won’t pay application, cancellation, change-in-beneficiary, or change-in-investment-option fees. Plus, as of this writing, the annual asset-based fees ranged from 0.02% to 0.185%, but note that fees may vary based on the type of investment you have (ex., single fund vs. multi-fund).

Not only are the fees for the MESP 529 plan low, but there are many investment options to meet different investor risk tolerances. This includes enrollment year investment options where the portfolio risk decreases as the expected college enrollment date approaches, single and multi-fund investment options with higher-level risk tolerances, and guaranteed investment options for people with lower risk tolerances. There aren’t any FDIC-insured options (e.g., certificates of deposit), which is a drawback.

The MESP has a top-tier Gold analyst rating from Morningstar. You can sign up for a 529 plan online with an initial investment of $25, or $15 per pay period if you enroll through an employer, and you can manage your account and investments online. 

You can reach the MESP team by phone at 1-877-861-6377 from 8 a.m. to 8 p.m. (ET) Monday through Friday.

Best for Performance : Oregon College Savings Plan


Oregon College Savings Plan

 Oregon College Savings Plan

  • Fees: 0.25%-0.466%
  • Availability: Nationwide
  • No. of Investment Types: 2

Why We Chose It: Oregon College Savings Plan is our choice as best for performance because it has a Silver analyst rating from Morningstar, its most recently reported returns since inception on its investment portfolios are in a competitive range of 1.02% to 8.34%, and it offers an FDIC-insured option for investors with lower risk tolerances.

Pros
  • No state residency requirements

  • Silver analyst rating from Morningstar

  • FDIC-insured investment options available

  • Competitive historical performance

Cons
  • Minimum investment of $25 required

  • Various service-based fees (e.g., $25 for rollovers)

  • Oldest portfolio inception date is September 2018

The Oregon College Savings Plan offers a 529 plan to people throughout the United States so they can save up to $400,000 for a student to pay for college. You can choose from multiple enrollment years and static investment portfolios to best fit your desired risk tolerance, and, unlike some of the other 529 plans we reviewed, the Oregon College Savings Plan also offers an FDIC-insured option. 

One of the drawbacks to the Oregon College Savings Plan is the cost, which carries total annual asset-based fees ranging from 0.25% to 0.466% of your total savings. There are also various service-based fees (e.g., $25 for rollovers). 

You can sign up for a 529 plan online with an initial investment of $25. Once your account is established, you can make some changes, like automatic contributions, online, but for other actions like closing your account, you’ll need to call its customer service team at 1-866-772-8464 between 6 a.m. and 5 p.m. (PT) Monday through Friday.

Best for Low Fees : ScholarShare 529 College Savings Plan


ScholarShare 529 College Savings Plan

ScholarShare 529 College Savings Plan

  • Fees: 0.01%-0.46%
  • Availability: Nationwide
  • No. of Investment Types: 3

Why We Chose It: ScholarShare 529 College Savings Plan charges no application, cancellation, change-in-beneficiary, or change-in-investment-portfolio fees. There are also no sales charges, commissions, or transfer fees.

Pros
  • No state residency requirements

  • Silver analyst rating from Morningstar

  • Low annual asset-based fees

  • Maximum contribution limit of $529,000

Cons
  • No FDIC-insured options

  • Phone assistance unavailable on weekends

  • Fewer investment options than some competitors

ScholarShare 529 College Savings Plan is based in California and offers a 529 plan to people across the United States to invest up to $529,000 for college expenses.

You can choose from a variety of investment options with ScholarShare 529. These include enrollment year, guaranteed, multi-fund, and single-fund investment portfolios. As of June 2022, the average annual compound rate of total return since inception ranged from 0.58% to 16.84% for its portfolios in existence for more than one year. Unfortunately, there isn’t an FDIC-insured option, which may be a drawback for some individuals. 

The ScholarShare 529 College Savings Plan has a Silver analyst rating from Morningstar. It’s easy to apply for and maintains your 529 plan online, and ScholarShare 529’s customer service team is available by phone at 1-800-544-5248 from 8 a.m. to 7 p.m. (PT) Monday through Friday.

Best for Customized Investments : my529


my529

my529

  • Fees: 0.10%-0.14%
  • Availability: Nationwide
  • No. of Investment Types: 2

Why We Chose It: We chose my529 as the best for customized investments because, in addition to offering a variety of age-based and static investment options, it also offers customizable investment options.

Pros
  • No state residency requirements

  • Gold analyst rating from Morningstar for 10 years

  • Maximum contribution limit of $510,000

  • FDIC-insured investment options available

Cons
  • Phone assistance unavailable on weekends

  • Includes an underlying fund expense fee & an administrative fee

  • Fewer investment types than some competitors

The Utah-based my529 offers plans to people throughout the United States to save up to $510,000 for a student to pay for college. You can choose from 12 target-enrollment, 10 static investment options (with FDIC-insured options available), and more than 30 customizable investment options. 

You’ll pay two sets of fees with my529: an underlying fund expenses for your investment ranging from 0.031% to 0.370% and an annual administrative fee ranging from 0.10% to 0.14%. As of June 2022, the historical average annualized returns since inception on the my529 investment plans range from 0.40% to 14.69%. 

My529's Gold analyst rating from Morningstar makes it the only 529 plan to have consistently received a top-tier mark each year since Morningstar debuted its ratings in 2012. You can sign up for a 529 plan, manage your account, and contribute online. 

If you need assistance, customer service is available by phone at 1-800-418-2551 from 7 a.m. to 5 p.m. (MT) Monday through Friday.

Best for Variety of Investment Choices : Bright Start College Savings Program


Bright Start College Savings Program

Bright Start College Savings Program 

  • Fees: 0.07%-0.82%
  • Availability: Nationwide
  • No. of Investment Types: 11

Why We Chose It: Bright Start College Savings Program allows investors to choose from a variety of age-based, individual fund, and target investment portfolios with 11 well-respected fund families including Vanguard and T. Rowe Price.

Pros
  • No state residency requirements

  • Gold analyst rating from Morningstar

  • Investment options from 11 well-respected fund families

Cons
  • No FDIC-insured options

  • Phone assistance unavailable on weekends

Bright Start College Savings Program is an Illinois-based 529 plan from Illinois that allows people from all over the United States to save up to $500,000 for college. It offers a wide variety of investment options, including age-based portfolios, six target portfolios, and 17 individual fund portfolios, to enable you to build an investment that best fits your preferences and appetite for risk. 

The operating expense ratio fee charged by Bright Start College Savings Program for its 529 plans ranges from 0.07% to 0.82% (inclusive of an administrative program management fee of 0.10%. The lifetime average annual total returns since inception ranged from 1.04% to 24.10% as of June 2022. 

One of the drawbacks is that there are no FDIC-insured options. However, the Bright Start College Savings program has a top-tier Gold analyst rating from Morningstar.  

You can manage your account online, but if you need to speak with a customer service representative by phone, you can call 1-877-432-7444 between 7 a.m. and 7 p.m. (CT) Monday through Friday.

Best for FDIC Backing : Invest529


Invest529

 Invest529

  • Fees: 0.10%-0.62%
  • Availability: Nationwide
  • No. of Investment Types: 2

Why We Chose It: Invest529 is best for FDIC backing because one of the principal-protected portfolios it offers is FDIC-insured, a great option for individuals who want extra protection against losses.

Pros
  • No state residency requirements

  • FDIC-insured investment options available

  • Maximum contribution limit of $500,000

Cons
  • No phone assistance on weekends

  • Various service-based fees

Invest529 is offered by Virginia529 and allows people from all across the United States to invest up to $500,000. It offers a diverse mix of investment plans, including an FDIC-insured option for individuals who want to protect themselves against the potential for losses. 

If you choose to get an Invest529 education savings plan, you can expect to pay asset-based fees ranging from 0.10% to 0.62%. Although there are no charges for online applications and changes to your investment strategies, you will have to pay some service fees (e.g., $25 for rollovers and $50 for paper applications). 

The historic annualized total returns since inception for portfolios in existence for more than one year with Invest529 ranged from 1.17% to 13.72% as of June 2022.

Morningstar gave Invest529 a Bronze analyst rating.

You can easily open and manage your Invest529 education savings plan online. If you want to speak to a customer service agent, you can reach Invest529 by phone at 1-888-567-0540 between 8:30 a.m. and 5 p.m. (ET) Monday through Friday.

Best for Prepaid Plans : Private College 529 Plan


Private College 529 Plan

Private College 529 Plan 

  • Fees: None
  • Availability: Nationwide
  • No. of Investment Types: 4

Why We Chose It: The Private College 529 Plan allows you to prepay and lock in your tuition rates with nearly 300 colleges and universities located throughout the United States with no fees.

Pros
  • No state residency requirements

  • No financial market risk

  • No fees associated with the plan

Cons
  • Can only be used for approved colleges

  • Maximum contribution limit of $317,030

  • Prepaid tuition is not guaranteed by the FDIC

Private College 529 Plan offers a prepaid tuition 529 plan that can be used to prepay up to $317,030 for a future student’s tuition. It’s backed by a consortium of nearly 300 private colleges and universities located across the United States, including Alaska and Hawaii. Plus, you won’t pay any fees. 

Private College 529 Plan stands out from the others on our list because it’s a prepaid tuition plan rather than an education savings plan. With an education savings plan, your investment’s value can increase or decrease with financial market changes whereas with a prepaid plan, you prepay for tuition at a select college (or group of colleges). You’ll get a tuition certificate that locks in tuition rates at the current prices. 

You can sign up for the Private College 529 Plan online, as well as manage your account online, and if you need additional help, you can speak with a customer service agent by calling 1-888-718-7878 between 9 a.m. and 8 p.m. (ET) Monday through Friday.

Final Verdict

Final Verdict

Although the 529 plan that’s best for you will depend on your specific goals, we think the Michigan Education Savings Program is the 529 plan that will meet most people’s needs. Not only does it have an excellent Gold analyst rating from Morningstar, but it’s available to people throughout the United States, carries low fees, and allows contributions up to $500,000.



What Is a 529 Plan?

A 529 plan is an investment that allows you to save for future college expenses while also taking advantage of tax savings. These plans allow you to either prepay tuition or purchase an investment that’s designated for college expenses. It differs from a traditional savings or investment account because the funds may be used only by the designated beneficiary for qualified higher-education expenses.

How Do 529 Plans Work?

There are two types of 529 plans that allow you to make contributions in different ways. A prepaid tuition plan allows you to purchase your tuition in advance, locking in the tuition cost at the current rates. An education savings plan allows you to save funds in an investment account for a future student (beneficiary) to use to pay for eligible higher education expenses (for example, tuition and mandatory fees).

Since a 529 plan is a type of investment plan, your return may vary depending on the characteristics of the investment and other factors. Additionally, historical returns are not necessarily indicative of how an investment will perform in the future, and it’s always a good idea to consult with a financial advisor before making an investment decision.

Who Should Get a 529 Plan?

Typically established by parents or grandparents on behalf of a child or grandchild, 529 plans are designed to help you save for future college expenses and take advantage of potential tax savings. Before you invest, make sure you’re willing to keep the funds in the account for the long run, as you may be charged fees if you need to make an early withdrawal. Be aware, however, that a 529 plan may affect the ability of a student to qualify for financial aid based on need.

Can I Only Choose a 529 Plan From My State?

Although 529 plans are available from every state as well as the District of Columbia, you don’t necessarily have to choose a 529 plan from your state. Most of the best 529 plans are available to people throughout the United States, regardless of where they live. Keep in mind, though, that 529 plans from your state might come with tax advantages that aren’t available with plans from outside your state.

How We Chose the Best 529 Plans

We researched several dozen providers to find the best 529 plans. Our goal was to understand the types of investments available with each provider, the level of historical returns, each plan’s cost, and whether it’s possible to set up and maintain an account online with each provider. 

All of our top 529 plan choices are from reputable providers, are available nationally, and have Morningstar ratings of Gold or Silver. Just one fell to Bronze after being awarded Silver the year before. They carry affordable rates, a variety of investment options, good historical returns, and it’s possible to apply for and maintain your account online.

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