The cost of education is constantly increasing in the US. While higher education is associated with better earnings, the cost of studying has increased at a much quicker pace than wages.

According to Statista, the average tuition and fees for higher education have almost tripled since 2000. The average amount stood at $14,688 in 2023. That’s one of the primary reasons why 1 in 6 adult Americans has student debt. According to Congress.gov, 43 million individuals have taken out college loans, with a portfolio of $1.6 trillion.

Due to the rising costs, many parents are turning to 529 college savings plans. As Investopedia notes, these are tax-advantaged accounts you can use for educational expenses. Initially, they were designed for postsecondary education, but Congress allowed using them for K-12 education and apprenticeship programs in 2017 and 2019, respectively.

Although 529 plans are beneficial, choosing the right one can be challenging due to the numerous available options, like Bright Start, Vanguard, and Fidelity. In this article, we will compare Bright Start vs other 529 plans to help you understand the differences in fees, investment choices, etc.

Bright Start: A Closer Look

The Illinois-sponsored Bright Start plan has gained attention for its low fees and flexible investment options. As the Bright Start 529 website states, the end goal of all 529 plans is the same: to help pay for education. However, the major difference lies in the portfolio or the investment strategy.

With Bright Star, you can choose from age-based tracks, target portfolios, or individual fund strategies. These options enable you to tailor your savings approach to your comfort level and long-term objectives.

The Bright Start 529 college savings plan portfolios are designed with a range of investors in mind. If you prefer simplicity, you may opt for age-based options that gradually adjust as the child approaches college age.

Seasoned investors have the alternative option of choosing a fixed asset allocation or a customized portfolio that meets their specific needs. This flexibility is one of Bright Start’s strongest features, particularly when compared to some national providers that offer a narrower menu.

Beyond the portfolio options, Bright Start is known for low administrative costs. The plan has consistently reduced fees over the past decade, which means more of your contributions go toward growth rather than overhead. For Illinois residents, the added state tax deduction makes Bright Start particularly appealing.

Vanguard: Reputation and Index Funds

Similar to Bright Start, Vanguard is also a 529 savings plan. In fact, Congress.gov states that there are 94 529 college savings plans compared to only 17 prepaid plans. Only 5% of the total assets in 529 portfolios are in prepaid plans, while 95% (worth $409 billion) are in savings plans.

Vanguard is known for its low-cost index funds. It also manages several state-sponsored 529 plans. If you value simplicity and minimal costs, you will often find Vanguard appealing. Its age-based tracks rely heavily on index funds, which provide broad diversification and low fees.

That said, Vanguard’s offerings can sometimes be more limited compared with Bright Start. If you’re looking for actively managed strategies or a wider mix of investments, Bright Start may provide more variety. However, if your goal is to stick with low-cost, broad-market index funds, Vanguard is hard to beat.

Fidelity: Flexibility with a Brand Name

Fidelity is another major competitor in the 529 space, offering plans through multiple states. Fidelity’s platforms often stand out for ease of use and a familiar brand. The investment options include both actively managed funds and index funds, similar to Bright Start, though fees may vary by state.

Where Fidelity shines is in its integration with other Fidelity accounts. If you already use Fidelity for retirement or brokerage accounts, you may appreciate the convenience of managing everything under one login. However, when it comes to overall cost, Fidelity plans may not always be the lowest compared with Bright Start or Vanguard.

There are low-cost Fidelity plans available, too. However, you may face many limitations with them. For instance, tax-loss harvesting is a standard feature in high-end plans. But if you opt for a low-cost Fidelity Go plan, it does not support tax-loss harvesting. That may be the reason why it was overtaken by another 529 plan, leaving it in a position outside the top three.

According to Morningstar, Fidelity was a long-standing top-three manager. However, it now sits in fourth position, as it was overtaken by TIAA-CREF in 2024.

CollegeAdvantage: A Worthy Mention

Ohio’s CollegeAdvantage plan is often ranked among the top 529 options in the country. It offers a wide range of investment choices, including Vanguard and Dimensional Fund Advisors portfolios, with competitive fees. Ohio families have an extra incentive to use these plans because of additional state tax benefits.

CollegeAdvantage and Vanguard have similar fee structures and fund quality. The main difference comes down to whether you live in Illinois, Ohio, or another state, as the tax deduction can tilt the scales.

When Bright Start Makes the Most Sense

If you live in Illinois, Bright Start is one of the best 529 options available thanks to its low costs and broad portfolio choices. To top it off, there’s a generous state tax deduction. Even out-of-state families may find it appealing if they want a balance of actively managed funds, index funds, and flexibility without paying high fees.

Frequently Asked Questions

Can I use a 529 plan if my child decides not to go to college?

Yes, you still have options. The money in a 529 plan can be used for other qualified education expenses, such as vocational or trade schools. If your child chooses a different path, you can transfer the funds to another eligible family member. You may face taxes and penalties if you withdraw the money for non-educational purposes, but it’s not a total loss.

Are there contribution limits for 529 plans?

Unlike retirement accounts, 529 plans don’t have annual contribution limits, but any money you contribute is considered a gift for tax purposes. The gift aspect can lead to contribution limitations. If you contribute more than $18,000 annually per beneficiary, it may trigger the federal gift tax.

Can grandparents open or contribute to a 529 plan?

Absolutely. Grandparents can open their own 529 plan for a grandchild or add money to one that the parents have opened. A recent change makes this even better: money taken out of a grandparent’s 529 plan will no longer count against a student’s financial aid eligibility.

Choosing a 529 plan is not just about brand recognition; it’s about fees, investment flexibility, and state-specific tax advantages. Bright Start stands out for its combination of low costs and customizable portfolios, making it an excellent option for many families. That said, the right plan for you depends on where you live, your investment preferences, and the value you place on convenience versus cost.