Oct. 06--Illinois is reducing fees on its Bright Directions 529 college savings plan, a move designed to help families put more of their investment toward rising tuition costs.
The change, which takes effect Nov. 15, eliminates a $10 setup fee and $3 quarterly maintenance fee, and cuts management fees by 43 percent, officials said Tuesday. More than 104,000 accounts will benefit from the new terms, saving investors nearly $3.6 million annually.
"A college education opens doors that otherwise would remain locked," Illinois Treasurer Michael Frerichs said in a statement. "That is why we must do everything possible to make higher education affordable for Illinois families."
A 529 plan is a qualified tuition program that allows families to save for college with an investment that is free from federal taxes. Such programs are administered on a state-by-state basis, with a variety of investment strategies.
The Illinois college savings program offers 55 investment options. Bright Directions, which launched in 2005, has about $2 billion under management, officials said.
The reduced fees were negotiated by the state with Nebraska-based Union Bank, which was selected to continue managing the fund through a competitive bid process in August. The new management contract term is for 18 months, officials said.
rchannick@tribpub.com
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