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A Chicago-based financial services and investment research firm has upgraded its financial rating of Iowa's college savings plan, naming it a bronze medalist.
Davenport Republican state Sen. Roby Smith, who is challenging state Treasurer Mike Fitzgerald in the Nov. 8 election, had criticized Fitzgerald for Morningstar’s decision to downgrade the College Savings Iowa 529 Plan to "neutral" for investments.
Fitzgerald, a Democrat and the longest-tenured state treasurer in the nation’s history, established the Iowa college savings plan. He said in October he expected Morningstar would soon raise Iowa’s rating and that the downgrade was the result of miscommunication.
“It comes as no surprise to me that College Savings Iowa is a medalist,” Fitzgerald said in a statement. “Iowa has a great plan that has helped thousands of families save for education expenses. We continue to provide individuals a plan that is low-cost and flexible enough to meet their savings needs.”
Morningstar analysts on Wednesday released its annual ratings for 54 of the nation's largest 529 college-savings plans. Two plans — Michigan and Utah — won gold ratings, with 32 plans rated as silver and bronze.
According to the report, “Investors in these medalist 529 plans should be well-positioned for the future.”
Twenty college savings plans were rated neutral or negative.
College Savings Iowa is a 529-investment plan sponsored and overseen by the Iowa State Treasurer's Office and managed by Vanguard.
The plan allows Iowa families to contribute after-tax dollars into one of four age-based savings tracks that allow participants to choose a portfolio that will gradually and automatically shift from more aggressive to more conservative as the beneficiary nears college age.
Earnings are federally tax-deferred, and individuals can withdraw money tax free to cover educational expenses for trade and vocational schools; two- and four-year colleges; postgraduate programs; certified apprenticeship programs; and tuition at an elementary or secondary public, private or religious school.
More information can be found at CollegeSavingsIowa.com or by calling 1-(888) 672-9116.
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