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College Savings

The U.Fund Gets Even Better – With a Substantial Fee Cut

The U.Fund Gets Even Better – With a Substantial Fee Cut
Picture2It just became even more beneficial to save for college. The fees for investing in the U.Fund 529 College Investing Plan have decreased. Depending on the investment portfolio, the fees have dropped between 30% and 52%.

This means the U.Fund offers among the lowest fees when compared to other 529 college savings plans nationwide. The U.Fund Index Portfolios’ fees will now range from 0.11% to 0.20%, down from 0.19% to 0.29%.

529 college savings plans are named for the section of the IRS code that created the tax-advantaged program to encourage families to save for college. MEFA contracts with Fidelity Investments to manage the plan, and we jointly announced the lower fees on July 6th.

Saving for college, especially in the U.Fund, is the best way for most families to avoid costly college loans. Savings and earnings in the U.Fund can be withdrawn and spent on higher education expenses free from federal and state taxes.

Research shows that more and more families in Massachusetts are saving for college, but there is still room for significant growth. The number of families saving for college, 71%, is at an all-time high in Massachusetts, according to Fidelity and MEFA’s annual College Savings Indicator Study. Other key findings include:

  • The typical Massachusetts family is currently on track to cover just 32% of their college funding goals by the time their child graduates from high school.

  • 53% of families report having a financial plan in place to help them reach their college goals.

  • 37% of families saving for college in Massachusetts are enrolled in a tax-advantaged 529 plan, such as the U.Fund.

  • 90% of those 529 account holders say they increased their savings rate or continued to save at the same rate compared to the previous 12 months.

If you're a family thinking about saving for college, now is the time to start. You can learn more about the U.Fund, including how to open an account online, on our dedicated U.Fund page.

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