Morningstar has assigned its top Gold rating to the Illinois Bright Start 529 College Savings plan, for the second year in a row. Only four 529 plans were given the gold designation, out of 62 plans rated by the Morningstar analysts. It is truly a high honor – and represents a dramatic change in fortune for the Illinois program. A decade ago – under different management – the Bright Start plan shocked investors with losses in its most conservative portfolios as the nation entered the financial crisis. Now, under new investment management and after cutting fees and costs, Illinois has risen consistently to the top levels.

The other three gold-rated plans are Vanguard’s Nevada plan, Utah’s my529 Educational plan, and Virginia’s Invest529 plan. Notably, all are direct-sold plans, which investors purchase without going through a broker or financial advisor, but instead purchase directly from the plan website.

In Illinois, residents get a special bonus – a state tax break on up to $10,000 of contributions each year for an individual taxpayer, and $20,000 for a married couple filing jointly.

As with all 529 plans, the money grows tax free to be used for qualified college expenses. And the money can be used for any college in any state. For those worried about state finances, it’s important to note that Bright Start accounts are held by an independent custodian and are not related to the state’s financial liabilities. (The CollegeIllinois prepaid tuition plan, on the other hand, could be impacted by Illinois financial woes.)

For years, I berated the Illinois plan for its lack of management oversight and high fees. Then two years ago I noted they had cut fees and changed management of many of the investment options within the plan. Now, there is true confirmation that Illinois Bright Start 529 Savings Plan is a golden opportunity to save for your child – or grandchild’s – college education.

Yes, there are market risks in the investments within the plan, since they primarily consist of stock market mutual funds. But if you start early, invest regularly, and choose the most conservative options, you should be on the way to paying for a college education without taking on the burdens of too much debt.

And that’s The Savage Truth.