Oregon College Savings Plan Earns Best-in-Class Rating Upgrade from Morningstar, Inc.
Silver status among national college savings plans signals that Oregon College Savings Plan is a strong option for investors
SALEM, Ore., October 29, 2020 – After a record-setting year of contributions and continued focus on developing a high-performing investment line-up, the Oregon College Savings Plan was rewarded this week with an upgrade to Silver status among national college savings plans. This is the second upgrade for the Oregon College Savings Plan in as many years and recognition that the plan is delivering for its participants.
The Oregon College Savings Plan is among the 14 plans singled out by Morningstar, Inc. as best-in-class and meriting their top-tier Gold or Silver rating. Morningstar analysts assigned ratings to 61 plans this year, and the Oregon College Savings Plan was one of 12 national plans to receive an upgrade.
Plans are recognized based on Morningstar’s confidence that their investment options will collectively outperform other plans and whether they exhibit a combination of attractive features, including: a well-researched asset-allocation approach, a robust process for selecting underlying investments, an appropriate set of options to meet investor needs, strong oversight from the state and investment manager, and low fees.
“We’re gratified that our hard work has paid off with this recognition from Morningstar,” said State Treasurer Tobias Read. “But we’re not about to take a break. Treasury will continue to be a leader in this space—enhancing savings options and making it easier for all Oregonians to save for their higher education and job training goals.”“We’re gratified that our hard work has paid off with this recognition from Morningstar,” said State Treasurer Tobias Read. “But we’re not about to take a break. Treasury will continue to be a leader in this space—enhancing savings options and making it easier for all Oregonians to save for their higher education and job training goals.”
Morningstar, Inc., a global investment research and investment management firm, assigns its ratings based on four key pillars—Process, People, Parent and Price—while also ensuring that performance analysis takes place as part of their broader assessment.
Contributing to the elevated status of the Oregon College Savings Plan this year was the strong investment management team behind the lineup, as well as Morningstar’s increased attention to the absolute value of plan fees. Changing plan administrators to Sumday Administration, a BNY Mellon company, allowed the Oregon College Savings Plan to lower underlying fund fees and offer an innovative program management fee structure which is expected to positively impact fees as plan assets grow.
Further, the Oregon College Savings Plan offers an industry-leading set of target investment options that allows savers to tailor investments and risk exposure based on the year the beneficiary is expected to enroll in higher education. This feature responds to the reality that not everybody moves directly to post-secondary education after high school.
The Oregon College Savings Plan is acknowledged by Morningstar to currently have one of the smoothest glide paths in the industry. The plan’s 2018 boost in standing was based on the adoption of this progressive glide path for its target date enrollment portfolios, and the overhaul of its investment lineup with high-quality passive and active strategies from a variety of firms, including Vanguard, DFA, and T. Rowe Price. Morningstar named these enhancements as an attractive option for state residents and nonresidents alike.
In addition to enhancing investment options, the Oregon College Savings Plan has focused on reducing barriers and improving and expanding options that make it easier to save. In January 2020, Oregon officially became the first state in the nation to offer a refundable tax credit for higher education savings, allowing more families to benefit from saving for college.
The Education Savings Credit replaces the previous tax deduction and provides the same maximum credit to all Oregonians who are saving for college, community college, trade school, or other post-secondary education through the Oregon College Savings Plan. Designed to reach communities across both the state and the income spectrum, the tax credit is tiered, with low- to moderate- income families receiving a higher percentage match.
Encouraging underserved communities to save for their future is a top priority of the Oregon 529 Savings Board and a focus of the Oregon College Savings Plan when implementing program enhancements. The program is already making a measurable difference through innovative partnerships and outreach to families looking for a simple means to make higher education more affordable.
The Oregon College Savings Plan set a record last year for new contributions, bringing in almost $249 million in contributions to more than 123,000 accounts across the state, ending the year with more than $2.1 billion in assets under management.