Two plans in the Nebraska Educational Savings Trust (NEST), the state-sponsored 529 college savings program, moved up in the annual Morningstar ratings from Neutral to Bronze, State Treasurer Don Stenberg announced today.
“Altogether, this is a good choice for Nebraska residents,” Morningstar said in its analysis of the NEST Direct College Savings Plan, one of four plans in the Nebraska Educational Savings Trust. “Nebraska residents should give this plan a look,” the Morningstar analysis said of the NEST Advisor College Savings Plan.
The Nebraska plans were two of the 32 college savings plans nationwide receiving medals from Morningstar, an independent investment research firm headquartered in Chicago. Four plans received the top gold rating; five plans received silver ratings; and 23 plans, including the two NEST plans, received bronze ratings.
In addition, 28 plans nationwide received neutral ratings, and four plans received negative ratings. Morningstar said it did not rate 21 of the industry’s smallest plans.
“We are very pleased with the improved ratings from the Morningstar organization, and we hope to do even better in the future. We have been working continually to improve our college savings program, and this rating is affirmation that our hard work, dedication, and attention to detail are making a difference,” State Treasurer Stenberg said.
“We will continue our efforts to provide the residents of Nebraska, as well as families across the United States, with sound, wise investment choices for saving for college and with many opportunities to start saving when children are young,” said Stenberg, who is Trustee of NEST.
“While our NEST plans were recognized by Morningstar for their reasonable expenses, investment flexibility, and solid structure, we are constantly improving our plans for the people of Nebraska in other ways as well,” said Rachel Biar, college savings program director for the State Treasurer’s Office. “We continue to expand our scholarship offerings, establish new contests for young writers and artists, and provide excellent customer service for families across the United States.”
“Being named as a Bronze medalist from Morningstar for the NEST Direct and NEST Advisor college savings plans recognizes the collaboration between First National Bank, the Nebraska State Treasurer, and the Nebraska Investment Council to ensure we provide outstanding college savings options at a responsible cost,” said Deborah Goodkin, Managing Director, College Savings Plans at First National Bank. “We are proud that Morningstar has recognized our efforts to offer excellent college savings plans.” First National Bank is Program Manager of NEST.
Morningstar said the following about the two NEST plans: “The list of plans earning Bronze medals got longer in 2013, reflecting the 529 industry’s steady improvements. All of the Bronze-rated plans have well-executed strategies at a fair price. Often what separates a Bronze plan from a Neutral plan is the state’s tax benefits. That was a contributing factor for two newcomers to the Bronze ranking, NEST Direct College Savings Plan and NEST Advisor College Savings Plan. The plans’ sponsoring state, Nebraska, recently doubled the state income tax deduction, maxing out at $10,000 for couples filing jointly. The plans also swapped out some lackluster investment choices for better ones. These changes together improve the likelihood of college savers’ success and upped the plans’ ratings from Neutral.”
Treasurer Stenberg cautioned that the $10,000 state income tax deduction for couples filing jointly, up from the current $5,000 deduction, goes into effect in the 2014 tax year for taxes due in April 2015. The increased income tax deduction was approved in the 2013 Legislative session.
NEST previously was recognized for its fund selection by Kiplinger’s Personal Finance magazine in 2011, and two NEST plans received the top five-cap rating from the well-respected website, savingforcollege.com, in 2012, the latest year for which those ratings are available.
NEST has more than $3 billion in assets with 208,000 accounts nationwide. More than 59,000 of those accounts are owned by Nebraskans. State-sponsored 529 college savings plans take their name from Section 529 of the U.S. Internal Revenue Code.
NEST is a tax-advantaged 529 college savings plan and provides four plans to help make saving for college simple and affordable: NEST Direct College Savings Plan, the NEST Advisor College Savings Plan, the TD Ameritrade 529 College Savings Plan, and the State Farm College Savings Plan. The Nebraska State Treasurer serves as Program Trustee. First National Bank of Omaha serves as Program Manager, and all investments are approved by the Nebraska Investment Council. Families nationwide are saving for college using Nebraska’s 529 College Savings Plans, which have more than 261,000 accounts, including 84,000 in Nebraska. Visit NEST529.com and treasurer.nebraska.gov for more information.