February 17, 2016
State Treasurer Clint Zweifel said the new management agreement for the Missouri 529 College Savings Plan, or MOST, will save parents millions of dollars.
“We’ve made it easier for families to save for college, made it less expensive for them,” Zweifel said.
The new program reduces fees, which is significant considering the total value of about 155,000 accounts across Missouri is about $2.4 billion, Zweifel said.
“High fees are the biggest investment drag on most retail investors’ returns, so … trying to reduce those fees was important,” he said. “We reduced fees by 25 percent for most of our participants and up to 80 percent for some of them. They’re going to save about $20 million over five years.”
The money will stay in taxpayers’ pockets rather than go into a mutual fund or an investment firm, Zweifel said.
“It will help (taxpayers) save even more and help that money grow even faster,” he said.
Other college savings plans across the country also have low fees, but require a $3,000 investment minimum, Zweifel said.
“Which stops a lot of people right at the door,” he said, but the Missouri 529 College Savings Plan has no minimum. “You contribute a dollar if you want to, $5, every pay period.”
The focus is to get parents to invest over time in the education of their children, Zweifel said.
“If we can just get individuals in the habit of saving a few dollars here and there, over time they can build that amount up,” Zweifel said. “Getting into the habit is an important part of that.”
The savings formula works, he said.
“Low fees, high access and eliminating hurdles to savings are all good tenants … in terms of investments strategy,” Zweifel said.
Zweifel’s office announced the new contract is with Ascensus College Savings. The agreement “retains most of the plan’s current Vanguard investment options but includes five new portfolios managed by Dimensional Fund Advisors” and “MOST 529 Advisor Plan accounts will be rolled into the MOST 529 Direct Plan,” Treasurer’s Office information states.
A MOST account has a greater value than money, Zweifel said.
“The other thing that we’ve learned is that the value of a college savings account has a profound impact on that child’s likelihood of attending college.”
Zweifel said research shows a college savings account is more valuable to children than the amount of money in the account.
“These accounts really help set expectations early on,” he said. “They help become a focal point of a conversation between parents and kids about their future, their dreams, their aspirations, and what they want to do to achieve them.”
NAST Appointed to Congressional Task Force on Intergovernmental Affairs https://goo.gl/do8ZYR