New York’s College Savings Plan

New York State is making it easier for families to save for college. According to a Bloomberg article by Alexis Leondis and Margaret Collins:

New Yorkers who participate in the state’s 529 college savings direct plan will see fees cut by almost 50 percent, New York State Comptroller Thomas DiNapoli said.

The direct plan’s total annual asset-based fee declined to 0.25 percent from 0.49 percent starting Aug. 29, according to a statement today from the comptroller’s office. The reduction could result in savings of almost $20 million annually for plan participants.

The reduction in fees paid for college savings plans mean that participants will contribute more of their money actually into the college savings plan; they will pay less money merely to service the accounts.

A 529 Plan, named for Section 529 of the Internal Revenue Code, is a college savings plan run by a state (or educational institution) to help families save and invest for the future cost of college.

The new reduction means that New York now has one of the lowest fees for 529 plans. Although 529s are state plans, they don’t really have much to do with the state itself. People can live in one state and invest in a 529 in another state. Money from these plans, in addition, can be used to pay for colleges all across the country.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer