Investment

Fidelity to cut fees for 529 college savings plans by 40 percent

Fidelity InvestmentsFidelity Investments said on Friday that it would reduce program management fees for its direct-sold 529 Index portfolios by 40 percent as part of an effort to help families save for college and develop saving strategies.

“Parents are working hard to save for college, and Fidelity is committed to providing college savings plans that offer great value alongside trusted guidance, to help families reach their college goals,” Keith Bernhardt, the vice president of college savings at Fidelity, said. “Lowering our fees means that more of our customers’ money can go directly toward their children’s education. Combined with Fidelity’s investment expertise, customer-focused planning guidance, online tools and educational resources, this reduction can help families with Fidelity-managed accounts feel more confident that they are on the right track to achieve their college savings goals.”

The fee reduction—from 0.15 percent to 0.09 percent—applies to all Fidelity-managed direct-sold plans, including The UNIQUE College Investing Plan for New Hampshire, Massachusetts’ U.Fund College Investing Plan, the Delaware College Investment Plan and Fidelity Arizona College Savings Plan.

Total fees for 529 Index portfolios range from 0.19 percent to 0.29 percent of assets, compared to 0.25 percent and 0.35 percent previously. All of Fidelity’s 529 college savings plans carry no annual fees, low-balance fees or fees for paper statements.

Recent research by Fidelity found that 69 percent of families are saving for college. Covering total college costs, however, remains a challenge for many families, as they struggle to meet rising education costs. The typical American family, according to Fidelity research, is currently on track to cover only 34 percent of college savings goals.

Despite being behind in meeting college goals, 61 percent of families said they have a financial plan in place to help reach college goals. Use of 529 college savings plans increased five percent from last year to reach 33 percent, and 37 percent of 529 plan owners said they have increased their regular contributions since opening their accounts.

“With college costs continuing to rise, the best step a family can take is to start saving early and systematically,” Bernhardt said. “Contributions add up over time, and saving in a dedicated account, like a tax-advantaged 529 college savings plan, can help stretch their dollars further when it comes time to pay for college expenses. Taking time now to think about college priorities, consider savings strategies and establish a plan can help put them on the right track to achieve future college savings goals.”

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