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Morningstar Issues Fifth Annual Best and Worst 529 College Savings Plan Study and Additional Resources on College Savings on Morningstar.com

CHICAGO, April 16 PRNewswire-FirstCall — Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today announced its fifth annual study of the best and worst 529 college savings plans. Morningstar is releasing the study, along with supplementary articles about 529 plans and college savings alternatives and a video covering the basics of 529 plans, today on Morningstar.com.

"We've witnessed noteworthy improvements in 529 college savings plans over the past few years," said Marta Norton, Morningstar mutual fund analyst and author of the study. "Overall, costs have come down, many of the poorer plans have improved their fund lineups considerably, and some ineffective plan administrators have exited the 529 plan management business entirely."

Morningstar's annual study of 529 plans is based on an evaluation of the plans' diversification, fees, flexibility, and the quality of the underlying funds. Investors have varying amounts to invest, as well as different risk profiles and time horizons, so asset allocation flexibility is a key consideration. Lower costs mean less taken out of an investor's returns, and Morningstar studies have shown that costs are the best predictor of a fund's long-term performance. Because many plans offer similar index funds, those with the lowest costs are likely to perform better than more expensive plans. In assessing 529 plans, Morningstar also looks at the managers, strategies, and stewardship of the underlying funds.

"The results of our 529 plan study have changed significantly from last year," Norton said. "There are three plans on the best list and only one plan on the worst list that were also on those lists last year. For example, we've strongly criticized Illinois' plan in the past for its poor investment options, and this year it is a new entrant on our list of the best 529 plans."

Illinois Bright Start College Savings Program is a major turnaround story. Hiring OppenheimerFunds, Inc. as the plan's administrator brought lower fees and more diverse investment options, allowing it to edge out a longstanding member of the best list, the Utah Education Savings Plan. Maryland College Investment Plan, a holdover from last year's best list, features high-quality funds, including Morningstar Analyst Pick T. Rowe Price Spectrum Income RPSIX, as well as a mix of strategies, customization, and low fees.

Two of Morningstar's favorite plans are Virginia's Education Savings Trust and College America plans, which both boast low fees and diversification. Both College America and Colorado's Scholars Choice are broker-sold and have earned spots on the best list two years in a row. Colorado's plan offers investors reasonable expenses and exposure to top investment managers.

Morningstar's list of the worst 529 plans features many new names. Putnam CollegeAdvantage, Ohio's broker-sold plan, has poor fund performance and high manager turnover.

Mississippi debuts on the worst list with its two 529 plans: Mississippi TIAA-CREF Affordable College Savings Program and Mississippi TIAA-CREF Affordable College Savings Advisor Program. TIAA-CREF charges high fees for both plans, and although the advisor-sold plan offers more investment options than its direct-sold counterpart, neither offers investors many choices or asset class exposure.

New York's 529 College Savings Program is also new to the worst list. While the plan is reasonably priced, it lacks diversification. Investors don't have international exposure, which means missed gains in foreign markets and no protection in a U.S. market downturn.

Nebraska AIM College Savings Plan makes a third consecutive appearance on Morningstar's worst list. Although the state made some changes to its plan last year, it remains too expensive compared to its peers.

Best 529 College Savings Plans Name Program Administrator Maryland College Investment Plan T. Rowe Price Virginia Education Savings Trust VA College Savings Plan Virginia College America* American Funds Illinois Bright Start College Savings Program OppenheimerFunds Colorado Scholars Choice College Savings Program* Legg Mason *Broker-sold Worst 529 College Savings Plans Name Program Administrator Ohio Putnam CollegeAdvantage* Putnam Mississippi TIAA-CREF Affordable College Savings Program TIAA-CREF Mississippi TIAA-CREF Affordable College Savings Advisor Program* TIAA-CREF New York 529 College Savings Program UPromise Nebraska AIM College Savings Plan* AIM *Broker-sold For Morningstar's complete 529 plan study, please visit http://www.morningstar.com/goto/Best529Plans. For additional resources on 529 plans and alternative college savings plans, please visit http://www.morningstar.com/goto/529Guide. Managing Your 529 College-Savings Plan Are 529 Prepaid Plans All They're Cracked Up to Be? Alternatives to 529 College-Savings Plans 529s: Should You Stay In-State or Shop Around? Video: Pros and Cons of 529 Plans About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on more than 265,000 investment offerings, including stocks, mutual funds, and similar vehicles. The company has operations in 18 countries and minority ownership positions in companies based in three other countries. For more information about Morningstar, visit http://www.morningstar.com.

(C)2008 Morningstar, Inc. All rights reserved. Media Contact: Courtney Goethals Dobrow 312-696-6241, courtney.dobrow@morningstar.com

SOURCE Morningstar, Inc.

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