Despite 1.6 million new accounts and more than $10 billion in new assets under management in 529 college savings plans last year, providers have been disappointed with the performance of the individual plans according to a recent report by Cerulli Associates of Boston.

While there are more than 70 savings plans now in operation, a mere seven providers closed 2002 with in excess of $1 billion in assets, Cerulli said. But, assets in the plan are expected to grow 40% by 2008, compounded annually, according to Cerulli.

Competition for the assets in this space is growing, the report notes, but the top 10 providers control 82% of the assets. Cerulli said that 25 other providers divided up 18% of the assets.

Profitability of these plans has been a major concern of providers, as the average balance of $6,457 falls short of covering operational and account administrative costs in most cases. However, there is room for growth, Cerulli notes. At the close of 2002, awareness of the programs was minimal and a mere 4.3% of children under 18 in the U.S has an account.

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