Senator Joe Pennacchio congratulated Franklin Templeton Investments on its announcement of a more than 50 percent reduction in fees to parents who invest in the NJBest college savings plan. Franklin Templeton manages the state plan.
In April, Senator Pennacchio was the first state legislator to call attention, through news releases and with questioning during Senate hearings, to a Morningstar report that ranked NJBest as one of the five worst 529 college savings plans in the nation. Morningstar said the fund had high fees and overly risky investment choices. Senator Pennacchio’s crusade for working parents included meeting with Franklin Templeton representatives, who promised him they would come up with a better plan and institute it as soon as it could get it through the state bureaucracy.
“The managers at Franklin Templeton have addressed many of my concerns about Morningstar’s report,” Pennacchio said. “I’m proud that I could work with Franklin Templeton to give struggling New Jersey families a break during a recession.”
According to Franklin Templeton, management fees paid to Franklin Templeton and the state’s Higher Education Student Assistance Authority will be reduced by 50 percent in January. In addition, a mutual fund with lower management fees will be substituted for a more expensive fund. Investors will also get a choice of risk-adjusted portfolios. Parents will be able to move money into low and moderate risk funds when a student nears college or the economy suggests that an aggressive fund is too risky.
“The missing piece in this picture is a tax deferral for parents who act responsibly and put money away for their children’s education,” Pennacchio said. “I will support future efforts to give hard-working parents a desperately needed tax deduction. I look forward to the day when NJBest is ranked as one of the top five 529 plans, not the bottom five.”