The SEC this week formed a special committee to help determine whether 529 college savings plans offered through mutual fund companies and brokerage firms are overcharging investors. SEC Chairman William Donaldson in a March 12 letter addressed to Rep. Michael Oxley (R-OH) announced a new initiative to study 529 programs dubbed "The Chairman's Task Force on College Savings Plans."
In his letter to Oxley, who chairs the financial services committee in the House, Donaldson expressed "concern" that expenses of some college savings plans have eroded special tax benefits authorized by Congress for the purpose of helping families accumulate educational savings. In addition, Donaldson noted that some plans have potentially become too complicated for average investors to understand. The purpose of the SEC's new 529 committee, Donaldson, said, is "to closely examine the structure and sale of college savings plan participants." Assets in 529 college savings plans have grown to $35 billion since their inception in 1997 and are expected to reach $145 billion by 2008.