Savingforcollege.com's latest study, FDIC-insured products in the 529 marketplace, includes a review and comparison of the available college savings plans offering investment options insured by the Federal Insurance Corporation (FDIC). Because they are backed by the full faith and credit of the U.S. government up to certain limits, FDIC-insured products are suitable for conservative investors interested in preserving capital without taking on excess risk. Currently, there are 23 plans that offer an FDIC-insured investment option, which include savings accounts and bank certificates of deposits (CDs).
The study finds that yield on FDIC-insurance products vary widely, ranging from 0.03% to 0.92% for savings portfolios to 0.25% to 2.00% for CDs, depending on the duration. Total annual asset based fees for plans offering an FDIC-insured product ranged from 0.00% to 0.67%, and nine plans charge account maintenance fees unless certain conditions are met.
At the time of the study, the Utah Educational Savings Plan offered the highest APY net of fees, at 0.92%, followed by Arizona's Bank Plan (0.90%) and Indiana's CollegeChoice CD 529 Savings Plan (0.90%), both managed by College Savings Bank. The study also examined cost versus returns, looking at published fees as reported by the plans. A wide disparity and lack of correlation was found between expense ratios and yield, where plans with no fees, including Ohio's CollegeAdvantage Direct 529, the Bank Plan and CollegeChoice CD achieved the highest yields with zero fees, and Achieve Montana, which has above-average costs and a low yield.
FDIC-insured products in the 529 marketplace was administered by Savingforcollege.com and sponsored by College Savings Bank, a division of NexBank SSB.
Click here to download the complete report