Raising kids and stressed over how you'll ever afford college tuition? With average annual tuition and fees at four-year public colleges for out-of-state students already at more than $22,000, according to the College Board—and the average rate at private institutions topping $30,000—you're not alone in worrying. But a 529 savings plan can help. Available in all 50 states, 529 savings plans let parents and prospective students save today, tax-free, for tomorrow's higher-education expenses.
These plans, much like 401(k) or IRA retirement schemes, invest savings (often in mutual funds) so they grow—again, tax-free—over time, often with risk levels tied to beneficiaries' ages. In other words, the closer to the first day on campus, the more conservative the portfolio becomes. Americans had invested more than $220.6 billion in 529 college savings plans as of the second quarter of 2014, according to research and consulting firm Strategic Insight.
The website Savingforcollege.com publishes a quarterly list of the top-performing state 529 plans nationwide. The choice of state 529 plan and school attended is often not tied to residency; for example, in many cases savers often live in, say, New York, opt to save in a California 529 and then attend school in Texas. Here are the Top 10 state 529 plans, based on 10-year investment performance as of June 30, according to Savingforcollege.com. (Savingforcollege.com compared the reported investment performance of a subset of portfolios from each 529 savings plan. The lower the "percentile," the better the ranking.)