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College Savers Pay a Premium for 529s

Expenses continue to shrink, but mutual funds are still cheaper.

While the gap is shrinking, the costs of 529 college savings plans continue to create a tough hurdle when compared with traditional mutual funds.

As part of its annual study of the 529 college-savings-plan industry, Morningstar's team of analysts dug into the costs associated with 529 plans. Because of many factors, including smaller asset bases and costs associated with state-level administration and marketing, 529 investment options typically carry more-expensive price tags than comparable traditional open-end mutual funds.

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