Has Your Child’s 529 Plan Imploded?

It’s been an abysmal year on Wall Street, and the same is true for the vast majority of “529” college savings plans. Of the 3,506 funds in college plans that Morningstar tracks, 93 percent fell in value over the past year, and 1,098 lost at least 40 percent.

There are popular age-based funds that invest more aggressively in stocks when a child is young and shift to a more conservative mix as the student nears college age – limiting the risk that the fund’s value could nosedive just as you’re ready to start drawing on it.

Yet even in this foul economy, some states have pushed 529 plans more heavily toward stocks. Last April, Oregon doubled the stock exposure in its "1-3 Years to College" portfolio to 40 percent.

"In some states, the asset allocation for the 16- to 18-year-olds looks as if it was designed by the 5-year-olds,” Mercer Bullard, a securities-law professor at the University of Mississippi told the Wall Street Journal.

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