Mention “Bright Start” or“Illinois college savings plan,” and many probably think about the 65,000 families that lost money when one of the funds tanked in 2008.
Add to that the state’s precarious financial situation, and it might seem a big risk to save for college with an Illinois-based plan.
But as Illinois Treasurer Michael Frerichs on Tuesday unveiled what he called “sweeping changes” coming to Bright Start, he sought to allay investor fears.
“These are separate funds,” he said, speaking to reporters at the Thompson Center. “They are managed by Union Bank & Trust. The state has no access to them.”
Investors’ annual fees are expected to be cut in half in some cases and investor choices are set to increase, after the state renegotiated its college savings plan contract.
“With our college savings contracts expiring this summer, we wanted to leverage the situation to ensure we were offering the best possible investment products at the most affordable prices,” Frerichs said.
Currently, there are about 450,000 so-called 529 plan accounts in the state worth about $9 billion, Frerichs said.
Such plans offer tax breaks to encourage families to save for future college costs.
In 2008, one Bright Start fund, Oppenheimer’s Core Plus, went south, losing $150,000 million of Illinois families’ savings. And it became an issue for then-State Treasurer Alexi Giannoulias, who was running for the U.S. Senate. At the time, Giannoulias said only 3 percent of families with money in Bright Start had all their money invested in Core Plus — the one fund out of 21 suffering huge losses.
To learn more about the coming Bright Start changes, go to www.brightstarttransition.com or call 844-473-8558.