College savings and prepaid plan assets continued to increase in the first quarter, with savings plans reaching an all-time high in total assets, according to a quarterly report from Financial Research Corp.
Total 529 savings plan assets increased to $158.3 billion as of March 31, a 9.6% spike from the end of 2011. Meanwhile, 529 prepaid plan assets increased 2.6% to $21.2 billion. The number of active accounts for savings plans increased 1.5% in the quarter while they decreased 0.1% in prepaid plans.
Similar to the trend of pension plans shifting to defined contribution from defined benefit plans, “I think we will see more closings of prepaid plans and more openings of savings plans,” said Paul Curley, director of college savings research at FRC, in a telephone interview.
Mr. Curley expects asset sizes to continue to grow with savings plans. ING Retirement Services and State Street Global Advisors are among firms that recently have entered the growing 529 management industry, he added.
Long-term mutual funds and ETFs, excluding funds of funds, are the fast-growing investment products with college savings plans, increasing 10.6% in the last quarter to $9.8 billion overall. Mr. Curley said about two-thirds of all assets are in age-based investment options.
The report studied 20 prepaid plans, of which 11 are still open, and 94 savings plans.
