College savings plan assets grew to a record high of $328 billion as of Dec. 31, up 14.7% from a year earlier, but then dropped to $293 billion as of March 31 amid the COVID-19 pandemic, according to a report from Morningstar.
"In 2019, college costs continued to rise, positioning education as one of the biggest financial hurdles facing American families," the report said. "The average cost of a four-year degree has more than doubled over the past 20 years, reaching $109,400 in 2018. Meanwhile, nominal wages have grown at less than half that pace, resulting in an ever-widening gap between income and education expenses."
Direct-sold plans grew by 7.3% a year from December 2015 through March 2020, while adviser-sold plans grew by only 2.8% over the same period.
Fees fell again in 2019, with the average expense ratio for directly sold age-based portfolios declining to 0.35% in 2019 from 0.39% in 2018. The average adviser-sold age-based portfolio cost 0.89% as of March 31, down by 0.04 percentage points since 2018.
Funds offered by Vanguard Group, American Funds, TIAA, Fidelity Investments and T. Rowe Price continue to dominate the investment lineups of 529 plans. From December 31, 2018, to March 31, these five firms accounted for 73% of all 529 plan assets.
Individually, Vanguard is No.1 on the list with 32% of the market share of 529 plan assets, followed by American Funds, at 22%; Fidelity and TIAA, both with 7%; and T. Rowe Price, 5%.
