Morningstar Releases Medalist Ratings for 529 College-Savings Plans, Including 11 Upgrades and Nine Downgrades

Rhea-AI Summary

Morningstar has released its Medalist Ratings for 59 of the nation's leading 529 college-savings plans, representing over 95% of the industry's assets as of August 31, 2024. The ratings, determined by Morningstar's research analysts, include 11 upgrades and nine downgrades. This comprehensive evaluation covers the majority of the 529 college savings market, providing valuable insights for investors and education savers.

Positive

• Coverage of 95% of 529 industry assets, demonstrating strong market presence and analytical depth
• 11 plan upgrades indicate improving quality in the 529 savings market

Negative

• Nine plan downgrades suggest deteriorating quality in some 529 offerings

Insights

Market Research Analyst

This annual 529 plan rating update from Morningstar represents their core business of providing investment research and ratings, but has minimal direct impact on MORN's stock price or financial performance. While the 529 ratings service contributes to Morningstar's reputation and overall business model, it's a routine update rather than a significant revenue-driving event.

The 529 plan ratings business is just one small component of Morningstar's diverse portfolio of investment research and data services. Individual rating changes, even multiple upgrades and downgrades, typically don't materially affect the company's financial results or market perception. This type of news is more relevant to 529 plan participants and administrators than to Morningstar investors.

CHICAGO--(BUSINESS WIRE)-- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment insights, today announced Morningstar Medalist Ratings™ for 59 of the nation’s most prominent 529 college-savings plans. These plans account for more than 95% of 529 industry assets as of Aug. 31, 2024. The Medalist Ratings reflect Morningstar manager research analysts’ forward-looking views of which plans are best suited to help investors reach their goals. It has five tiers—Gold, Silver, Bronze, Neutral, and Negative. This year, Morningstar analysts assigned five Gold ratings, 14 Silver ratings, 13 Bronze ratings, 21 Neutral ratings, and six Negative ratings to the 529 plans.

"Our 2024 assessment of 529 education savings plans highlights significant strides in investment quality and state stewardship, with more than half of evaluated plans receiving a Bronze rating or better," said Hyunmin Kim, manager research analyst at Morningstar. "The evaluation process focuses on the importance of well-constructed portfolios, effective oversight, and seasoned management, and we're committed to helping savers determine the best plan options to help fund their education."

A full list of Morningstar’s 529 ratings and key insights is available in a Fund Spy article published today on Morningstar.com. The 2024 ratings reflect Morningstar’s updated methodology for evaluating 529 education savings plans. The updated framework increases the emphasis on the Process and Parent pillars. Plan fees, now evaluated using a modified z-score, have a varying impact on the overall rating.

In this year’s assessment, Morningstar analysts upgraded 11 plans and downgraded nine. Five plans are new to coverage from the 2023 ratings. The table below shows these changes.

Upgrades (Distribution Channel)	State	Current Morningstar Medalist Rating	Previous Morningstar Medalist Rating
T. Rowe Price College Savings Plan (Direct)	AK	Gold	Silver
Bright Start Direct-Sold College Savings (Direct)	IL	Gold	Silver
U. Fund College Investing Plan (Direct)	MA	Gold	Silver
ScholarShare College Savings Plan (Direct)	CA	Silver	Bronze
CHET Direct College Savings Plan (Direct)	CT	Silver	Bronze
NextGen College Investing Plan Direct (Direct)	ME	Silver	Bronze
UNIQUE College Investing Plan (Direct)	NH	Silver	Bronze
BlackRock CollegeAdvantage 529 Plan (Advisor)	OH	Silver	Bronze
Indiana529 Direct Savings Plan (Direct)	IN	Bronze	Neutral
Bloomwell 529 Education Savings Plan (Direct)	NE	Bronze	Neutral
Franklin Templeton 529 College Savings Plan (Advisor)	NJ	Neutral	Negative
Downgrades (Distribution Channel)	State	Current Morningstar Medalist Rating	Previous Morningstar Medalist Rating
The Vanguard 529 College Savings Plan (Direct)	NV	Bronze	Silver
Invest529 (Direct)	VA	Bronze	Silver
Edvest 529 Plan (Direct)	WI	Bronze	Silver
CollegeCounts 529 Fund Direct-Sold Plan (Direct)	AL	Neutral	Bronze
CollegeInvest Direct Portfolio College Savings Plan (Direct)	CO	Neutral	Bronze
Bright Directions Advisor-Guided 529 College Savings Plan (Advisor)	IL	Neutral	Bronze
National College Savings Program (Direct)	NC	Neutral	Bronze
Future Scholar 529 (Direct)	SC	Neutral	Bronze
Future Scholar 529 (Advisor)	SC	Negative	Neutral
New to Coverage (Distribution Channel)	State	Morningstar Medalist Rating	Previous Morningstar Medalist Rating
DC College Savings Plan (Direct)	DC	Bronze
Scholars Choice Education Savings Plan (Advisor)	CO	Neutral
The Louisiana START Saving for College (Direct)	LA	Neutral
MFS 529 Savings Plan (Advisor)	OR	Neutral
USAA 529 Education Savings Plan (Direct)	NV	Negative

For more information on 529 college-savings plans – including use cases and tips for selecting a plan – visit Morningstar’s 529 Plan Guide on Morningstar.com.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment insights in North America, Europe, Australia, and Asia. The Company offers an extensive line of products and solutions that serve a wide range of market participants, including individual and institutional investors in public and private capital markets, financial advisors and wealth managers, asset managers, retirement plan providers and sponsors, and issuers of fixed-income securities. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, debt securities, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $328 billion in AUMA as of Sept. 30, 2024. The Company operates through wholly-owned subsidiaries in 32 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on X (formerly known as Twitter) @MorningstarInc.

Morningstar’s Manager Research Group

Morningstar’s Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. Morningstar Manager Research provides independent, fundamental analysis on managed investment strategies. Morningstar views are expressed in the form of Morningstar Medalist Ratings, which are derived through research of three key pillars—People, Process, and Parent. The Morningstar Medalist Rating is the summary expression of Morningstar’s forward-looking analysis of investment strategies as offered via specific vehicles using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. A global research team issues detailed research reports on strategies that span vehicle, asset class, and geography.

Medalist Ratings are not statements of fact, nor are they credit or risk ratings, and should not be used as the sole basis for investment decisions. A Medalist Rating is not intended to be nor is a guarantee of future performance. This press release is for informational purposes only; references to securities should not be considered an offer or solicitation to buy or sell the securities.

©2024 Morningstar, Inc. All Rights Reserved.

MORN-R

View source version on businesswire.com: https://www.businesswire.com/news/home/20241028014862/en/

Morningstar Media Contact:

Michael Claussen, +1 312 696-6037 or newsroom@morningstar.com

Source: Morningstar, Inc.

FAQ

How many 529 college-savings plans did Morningstar (MORN) rate in its latest evaluation?

Morningstar rated 59 of the nation's most prominent 529 college-savings plans, covering more than 95% of industry assets as of August 31, 2024.

What changes occurred in Morningstar's (MORN) 529 plan ratings for 2024?

Morningstar's 2024 evaluation resulted in 11 upgrades and nine downgrades among the rated 529 college-savings plans.

What percentage of 529 industry assets does Morningstar's (MORN) latest rating analysis cover?

Morningstar's latest rating analysis covers more than 95% of 529 industry assets as of August 31, 2024.