HARRISBURG, PA — Many Pennsylvania families saving for education through the state’s PA 529 Investment Plan will see lower account fees following a new round of reductions announced by the state Treasury.
What This Means for You
- Lower investment management fees will save PA 529 account holders about $500,000 annually.
- Most investment options within the PA 529 Investment Plan will see reduced costs.
- The program helps families save for college, career training, and other education expenses with tax advantages.
Pennsylvania Treasurer Stacy Garrity announced this week that new fee reductions implemented by Vanguard, the investment manager for the PA 529 Investment Plan, will lower costs for many account holders across the program.
The changes affect 20 of the plan’s 26 investment portfolios.
Fee reductions range from 0.04 to 4.00 basis points, depending on the investment portfolio selected. A basis point equals one-hundredth of a percent, meaning the reductions represent small percentage decreases in annual investment management costs.
Treasury officials estimate the changes will collectively save account holders about $500,000 per year.
“This new fee cut enhances and highlights the affordability of our PA 529 Investment Plan,” Garrity said. “Every reduction in fees is a boost to education savings.”
How the PA 529 Investment Plan Works
The PA 529 Investment Plan allows families to invest money for future education expenses through professionally managed investment portfolios.
Many families choose target enrollment portfolios, which automatically adjust investment risk over time as a child approaches the expected age for using the funds for education.
Funds in a PA 529 account can be used for a wide range of education costs, including college tuition, technical training programs, apprenticeship programs, credential programs, and certain K-12 education expenses.
Treasury officials note that assets held in PA 529 accounts do not affect eligibility for Pennsylvania state financial aid.
Currently, more than 214,000 PA 529 Investment Plan accounts are active, with more than $7 billion saved for education expenses.
Program Receives National Recognition
The PA 529 Investment Plan has received a Gold rating from Morningstar, a financial research firm that evaluates investment plans.
It has earned the designation for three consecutive years and is one of only two state plans nationwide to receive that rating during that period.
Morningstar cited the program’s relatively low costs, management oversight, and ongoing fee reductions as key factors in its evaluation.
Pennsylvania also offers a second savings option through the PA 529 Guaranteed Savings Plan, which allows families to lock in future tuition costs at today’s rates.
Families with children born in 2019 or later may also receive a $100 starter scholarship through the Keystone Scholars program, which is designed to encourage early education savings.
Additional information about the program is available at pa529.com or by calling 800-440-4000.
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