Improvements bolster outlook for AIM College Savings Plan

A March 12 editorial "Tale of Two Plans" discussed recent rankings of two parts of Nebraska's College Savings Plan published by Morningstar Inc., a Chicago-based firm that tracks and rates investment funds.

The College Savings Plan of Nebraska was ranked No. 3, while the AIM College Savings Plan received unfavorable remarks. Morningstar cited what it termed to be unproven investment options and above-average expenses.

Nebraska originally joined in the agreement with AIM Investments in December 2001 to give College Savings Plan participants the opportunity to work with a national plan distributor. People who are interested in this type of plan also had the choice of going to other states for a 529 college savings plan. The partnership with AIM has allowed Nebraskans to have one of the most diversified investment options available on the market.

In addition, AIM is affiliated with the State Farm Insurance group. This partnership provides exposure through more than 16,000 State Farm agents who sell The State Farm College Savings Plan throughout the United States. This enables Nebraskans to access the program through their local State Farm representative.

It should be noted that, in a good faith effort, AIM came to the table mid-contract and renegotiated the terms in order to improve its overall services. These new terms go into effect on Monday. As part of these new terms, AIM has eliminated the $25 account fee on automatic investment plans, as reflected in the new enrollment handbook.

Additionally, AIM Allocation Funds will be the underlying investments for five new enrollment based portfolios and five new static portfolios. We believe that these changes will enhance AIM's ability to specialize investment teams using enrollment-based and age-based portfolios, which are becoming increasingly popular in the 529 marketplace.

Morningstar compiles their rankings annually during the month of February. Its information was based on the prior 2006 AIM plan structure and did not take into account the new enhancements.

On Monday, however, changes to the fee structure will offer better product selection, more competitive expenses and enhancements to the portfolios. With the latest changes implemented by AIM, it is hoped that AIM will fair much better on future Morningstar rankings.

I credit the World-Herald for taking an interest in the Nebraska's College Savings Plan and for bringing attention to this important issue. Upon being sworn in as state treasurer on January 4, I was made trustee of the plan. Since that time, I've shared the concerns brought forth in your editorial.

I will be monitoring this plan closely until the contract comes up for renewal. AIM has a two year period to prove they have taken the necessary steps to remain part of the Nebraska College Savings Program.