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TX College Savings Plan |
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State Provider: Texas; Net Assets ($mil):
$123.3 as of
10-31-09 |
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Texas' College Savings Plan is on the road to recovery, but it's far from a standout option. This direct-sold plan, managed by Oppenheimer, had exposure to some of the bond world's worst offenders in 2008. In particular, the plan had assets in Oppenheimer Core Bond, a fund that sustained steep losses in 2008 due to management's big bets on illiquid securities. As a result, the plan's "Blended Age Based 15 - 17 Years Portfolio," which had half its assets devoted to Core Bond, fell nearly 30% in 2008. And the "Blended Balanced Portfolio," which had 40% in Core Bond, lost more than a third of its value in 2008. Problems began to surface at Oppenheimer Core Bond in November 2008, but it took the state until March 16, 2009, to replace that troubled fund with another option. Today, the plan offers a Dreyfus bond index fund in place of Core Bond. Unfortunately, the Dreyfus index fund's low-cost advantage is eroded by an additional 0.30% administrative fee (which is double the cost of the underlying fund's expenses), on top of additional 0.35% fees for program management and state administration. Taken as a whole, however, the plan's overall fees are below average. Total fees for the "Index Portfolios" range from 0.40% to 0.53%, and the fees for the plan's "Blended Portfolios" (a combination of active and passive strategies) range from 0.56% to 0.76%. With the removal of Core Bond, the plan's underlying holdings now feature tried-and-true index funds with a respectable lineup of actively managed Oppenheimer funds sprinkled in. Overall, this makes for a serviceable option, but such an index-centric approach invites fierce competition from the likes of Vanguard and TIAA-CREF. For example, investors can find lower-cost options at Ohio's CollegeAdvantage direct-sold plan or Michigan's Education Savings Program. Because Texas residents can't take advantage of any state income tax breaks (the Lone Star State doesn't have a personal income tax), we'd encourage all investors to look at less expensive options instead of this plan. (Information as of 04/06/2009) |
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| Availability: Sales Channel |
Resident: Both
Non-Resident: Broker
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| Annual State Tax Deduction |
| Max Investment/Beneficiary |
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$320,000 |
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(includes appreciation)
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| Mos. to Qualified Withdrawal |
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Public, Private & International
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| Blended Age Based, Index Age Based |
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Age-Based Portfolios
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| Static Portfolios |
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| US Stock
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Bond |
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| Total International Funds: 0 |
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| Underlying Funds’ Ratings |
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| Overall Morningstar Rating |
# Equity
Funds |
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# Bond
Funds |
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| Ratings as of
10-31-09 |
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| Range |
0.25 |
| 529 Plan Avg |
0.8 |
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| Portfolio Expense Ratio Range |
| Fee to Change Beneficiary |
| Share Classes: Sales Charge |
| Other:
4.75% (front-load) |
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| Initial Purchase |
$25 |
$25 |
| Additional Purchase |
25 |
25 |
| Initial (AIP) |
15 |
15 |
| Additional (AIP) |
15 |
15 |
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