Famous for its five-star mutual fund grading system, Morningstar will start to rate 529 plans. Just in time for the new school year, this fall the company will begin comparing the college savings funds, according to InvestmentNews.

Morningstar currently produces an annual list of the best and worst 529s. The new ratings system will compare the funds like mutual funds, basing the grade primarily on performance and fees.

"These investments are competing with the same shareholder dollars as mutual funds," Laura Lutton, a Morningstar analyst who is working on the ratings said in the article. "So I think a 529 vehicle has to demonstrate that it’s a viable alternative to a taxable account."

As of today, Morningstar has profiles on nearly 90 different 529 plans on its website. The profiles include a break down of underlying fund investments and funds, information on portfolio allocations, tax deductions, fees and investment restrictions, as well as other management notes. 

Edited by: Daniel Tovrov


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