TEXT OF INTERVIEW

TESS VIGELAND: Changes to student loans aren't the only issue facing incoming college students. Those with money set aside in state-sponsored education plans have watched their returns wither almost as fast as 401(k)s. They're called 529s and are offered by all 50 states. The College Savings Foundation says assets in those plans dropped 21% in the fourth quarter of last year. That's causing a whole new round of scrutiny for a savings program that's gotten mad props since its debut in 1997. Bill Parish is a financial planner based in Portland, Ore. Bill, your initial opinion?

Bill Parish: It's a terrific program. What's unique though is that every state has a different program. So it can be confusing, because when this law was set up, there was no SEC oversight provided. So basically the oversight falls to the individual states, and then it becomes a political process -- there's a bidding process in each state.

VIGELAND: A bidding process for which mutual fund plan, say, you're going to hire?

Parish: Right. So, for instance, in Oregon, Vanguard might be competing with Oppenheimer. And then who ever is in charge in the state chooses the vendor, basically.

VIGELAND: But how are you supposed to sift through the various states and their plans? Is there anything that helps you with comparing and contrasting?

Parish: No, to be perfectly honest with you, because it's somewhat of a shell game. For instance, here in Oregon we have Oppenheimer, and they give it a certain name. But in Illinois, it's the same plan but with a different name. It basically needs regulatory oversight by the Securities and Exchange Commission, and the most simple thing would be just accurately communicate the returns. But, you know, the good news is, there are 50 plans out there. You know, what I'd say to any person out there concerned about college savings plans -- two great choices. Go to Vanguard.com and choose Vanguard or go to TDAmeritrade. They're both terrific choices. Forget your own state.

VIGELAND: OK. And we should make a note that you are not in any way paid by them.

Parish: No. I've never accepted a penny from any investment company. I'm an SEC registered investment advisor and I will definitively say that the two best are Vanguard and TDAmeritrade.

VIGELAND: Let me ask you about two other factors that are involved in the 529 plan that I think make it all so confusing for people. One of which is that in many, or perhaps all of them, there are real restrictions on when you can go in and make adjustments to the plan. And then second of all, there are tax considerations in some of these states, correct?

Parish: Yes. The restrictions basically -- you can move your account, just like you move an IRA, up to one time a year. In terms of the actual investment choices, the mix, you can change that once a year also. And frankly, I think once a year should be fine. The second part of your question -- the tax thing is completely overblown. For instance, here in Oregon you get a tax deduction for state purposes only, up to $2,000.

VIGELAND: If you're in the Oregon plan?

Parish: Right. If you're in the Oregon plan. And most states are this way. OK, so if you're in the maximum tax bracket, it's a benefit to you of $180. But ask yourself, is it really worth taking that benefit of $180 and getting stuck with a bad Oregon plan? If I could give one common sense recommendation, I'd just say, forget about the tax deduction all together. Just go for a high quality plan.

VIGELAND: And I wanted to ask you one final questions about kind of the behavior of 529 investors. It does seem that, at least from, you know, the folks who have written into the program, you know, they talk about how they really felt that they had to take a lot of risk and really be very aggressive in their investments. Because if you look down the line, you know, 20 years from now you may be looking at a college education bill of $100,000, $200,000. And there's no way you're going to get there unless you take a lot of risk. And I think that's where some folks have run into trouble in this market. Any advice for them?

Parish: What I would say to all those folks is, it's important to save. And you get earnings from your investment, that's true. But I think the beautiful word they're missing is balance. Why not have 60 percent of the assets in high quality fixed income and 40 percent in equities? The reason people are out of balance, the real inside story, is that the investment industry makes about three times, in general, in fees on anything you're in that's stock-based verses fixed income.

VIGELAND: So the mantra, just like every other investment vehicle, is diversification.

Parish: Right. Investment's a beautiful thing. I mean, you got to do something. Imagine contributing 20 years to one of these plans and your kid doesn't go to college, they've got a great start in life. They get all those assets. Now, they'll be taxed at their tax bracket, but during that entire 20 years, all the income you earn from the fixed income, maybe some equity gains, it's all tax deferred. It's a terrific vehicle.

VIGELAND: Bill Parish is a financial planner based in Portland, Ore. Thanks so much.

Parish: Thanks for having me.