Illinois’ college savings plan gets top rating from Morningstar

Oct. 26--Morningstar likes the changes that Illinois made this summer in its college-savings plan.

The investment analysis firm gives BrightStart, Illinois' plan that's available directly to investors, its highest gold rating, up from bronze last year. Morningstar notes that Union Bank & Trust replaced Oppenheimer Funds in July as BrightStart's program manager, and proceeded to reduce fees and revamp investment options.

Illinois eliminated a $10 per account maintenance fee, and BrightStart's popular age-based option now levies expenses of between 0.12 percent and 0.15 percent. That is "among the cheapest in the industry," Morningstar says.

College-savings plans from Virginia, Nevada and Utah also received gold ratings.

Missouri's MOST plan received a silver rating from Morningstar for the second year in a row. Illinois' Bright Directions plan, which is sold through brokers, was also among the 10 funds in the silver category.

MOST's age-based options, which invest in index funds and shift from stocks to bonds as a child ages, have an expense ratio of 0.23 percent.

BrightStart and MOST are called Section 529 plans, after a section in the tax code that allows college savings to accumulate tax-free.

An llinois resident can take a state-income tax deduction for up to $10,000 a year in BrightStart contributions, or $20,000 for a married couple. Missourians can deduct $8,000 a year for individuals, or $16,000 for couples, in contributions to any Section 529 plan.

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