HELENA, Mont. (AP) ¿ Montana's college savings plan has been rated one of the worst in the country by investment research firm Morningstar Inc., even as climbing college costs are making it harder for many students and families to afford education.

The firm's annual review of college savings plan looks at fees, investment portfolio quality and plan flexibility. Montana made the nationwide list of the five worst plans, along with Nebraska, which has two plans, New Jersey and Ohio.

The Montana plan, which is operated by California-based Pacific Life, gets poor marks for its high fees and lack of age-based investment options.

Greg Brown, a Morningstar analyst, said most states offer age-based plans that shift a portfolio's balance from equities toward more conservative investments as a child nears college age. Such plans are popular because they offer families a low maintenance way to save for college education.

"At least three-quarters of people will choose age-based plans if they're offered," said Brown, who conducted the review of state plans. Since the plans waive taxes on a portion of college savings, they are often called 529 plans after a section of the Internal Revenue Code.

According to the Morningstar review, the fees associated with Montana's five fund investment plans are also higher than those of most states. They range from 1.19 percent to 1.43 percent, depending on the plan.

Pacific Life rejected the Morningstar criticism of its funds, which it said vary only on the basis of risk to ensure transparency and simplicity for investors.

"We find it interesting that Morningstar faulted the Montana plan for not offering age-based portfolios when many of these types of portfolios unexpectedly achieved very poor results in 2008," said Tennyson Oyler, spokesman for Pacific Life.

Oyler also said the industry average for fees sits at 1.29 percent, well within the range set by Montana's college-savings funds.

Some age-based portfolios were criticized in the Morningstar report for not properly timing shifts in risk exposure to lower the risk when a student enters college.

Board of Regents member Todd Buchanan said the state is in the process of finding ways to offer more variety to Montanans looking to save money for higher education. He serves on a commission for the Montana Guaranteed Student Loan Program that oversees the investment plans.

"It has been the priority of the oversight commission to increase the options for Montana investors and we are in the process of sending out a request for proposals, as well as looking into adopting other state plans," Buchanan said.

The Board of Regents of Higher Education is the trustee for the state's college savings program. The board currently contracts with College Savings Bank to administer the state's plans. College Savings Bank in turn contracts with Pacific Life Funds to run the five mutual funds.

The state's contract with College Savings Bank ends sometime this summer, Buchanan said, at which time the Regents could choose another plan operator. They could also opt to allow Montanans to use other states' better-rated plans, but still avoid state taxes on their investments, he said.

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