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Vanguard Drops Fees for 529 Plans

In a competitive move, Vanguard will cut expense ratios for the college savings plans.
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BOSTON (TheStreet) -- Vanguard announced Tuesday that it will lower the cost of saving for college by reducing expense ratios on its Vanguard 529 College Savings Plan by nearly half on some portfolios.

Vanguard says the discount will affect more than 100,000 clients and represents $8.5 million in annual savings.

In detail, those invested in one of the plan's three age-based options will see their all-in costs reduced from 0.44% ($4.40 per $1,000 invested) to 0.25% ($2.50 per $1,000 invested). Those invested in one of the plan's 19 individual portfolios will see their all-in costs reduced to between 0.25% and 0.55% from between 0.44% and 0.66%.

The Vanguard 529 Plan, sponsored by the state of Nevada, has $4.5 billion in assets. In a statement, Vanguard said it has worked with the state and program manager

Upromise Investments

to cut costs. This is the fifth time clients have seen costs reduced since the plan was introduced in 2004. The new expense ratios become effective Oct. 15.

Vanguard has also partnered with

College Savings Iowa

to reduce its all-in plan expenses by one-third. In August, the

New York's 529 Direct Plan

, the nation's largest direct-sold 529 college savings plan, cut its expense ratios nearly in half. Earlier this year,

MOST Missouri's 529 Plan

and the

Pennsylvania 529 Investment Plan

also announced lower all-in plan costs.

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-- Written by Joe Mont in Boston.

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