BLOG: A Guide to Fossil-Free 529 College Savings

Resources on saving for a child’s education without supporting the fossil fuel industry

What is a 529 College Savings Plan?

529 college savings accounts are designed to help families save for their children’s future education. For those fortunate enough to be able to stash money away, 529s can be a great resource. Investments in 529 accounts grow tax-free. Plus, withdrawals are not taxed if used for qualifying educational expenses such as tuition, required fees, books, food, and housing. 

Each state offers its own 529 plan, but you are not restricted to your own state’s plan. You can choose from any plan offered by any state across the country. This greatly expands your savings options because many individual state plans are restricted to a handful of portfolios for the saver to choose from. The term portfolio in this context is simply a bundle of one or more mutual funds. 

Are your child’s educational savings invested in companies fueling the climate crisis?

The unfortunate reality is that, also like retirement plans, most 529 plans invest in high carbon polluting industries (e.g coal, oil and gas companies) responsible for fueling the climate crisis.  For example, Connecticut, like many states, currently only offers portfolios that have significant fossil fuel company holdings (with the exception of very conservative treasury bond and money market accounts). Even Fidelity’s Sustainable Multi-Asset Fund (FYMRX),  offered within MA, NH and CT 529 plans, is branded as sustainable but holds oil and gas companies stocks including TotalEnergies SE, Saudi Arabian Oil Co and Halliburton Co.

For us, the idea of investing in our children’s futures by supporting the industries driving climate change is morally objectionable. It is also potentially financially risky. The energy sector has had the lowest returns and highest volatility compared to other sectors across the last 20+ years (learn more in this S&P Global analysis, and follow up analysis).

Fossil Free Fossil Free Options in Current State 529 Savings Plans

Fortunately, there are now fossil fuel free portfolios (or nearly fossil free depending on your definition*) available within a handful of state plans. Reminder, 529 portfolios are generally a combination of one or more mutual funds. The available fossil free portfolios have different names but are composed of one of the following three mutual funds: the Parnassus Core Equity Fund  (PRBLX), the Vanguard FTSE Social Index Fund (VFTAX) or the Fidelity Climate Action Fund (FCAEX). All three funds received a B for their fossil fuel exposure by As You Sow. For comparison, equity-based mutual funds incorporated into 529 portfolios usually score around Ds.

It can take a little digging to figure out which mutual fund or funds make up a 529 portfolio. We’ve compiled a table with the available fossil free portfolio names, the state offering the portfolio, the mutual fund that makes up the portfolio and the fees charged for investing in that portfolio.

Portfolio name as presented in 529 College Savings plan	State	Underlying Fund	Fee (%) (as of Jan 2025)
Specialty Portfolios –  ESG Core Equity	Virginia	Parnassus Core Equity Fund (PRBLX)	0.554
Individual Portfolios –  Parnassus Core Equity 529	Illinois	Parnassus Core Equity Fund (PRBLX)	0.695
Individual Portfolios – Social Index	New York	Vanguard FTSE Social Index Fund (VFTAX)*	0.12
Customized Age-based and Static -FTSE Social Index Fund	Utah	Vanguard FTSE Social Index Fund (VFTAX)	0.12
Advanced Portfolios- Social Index Fund	Florida	Vanguard FTSE Social Index Fund (VFTAX)	0.14
Individual- Social Index Portfolio	Pennsylvania	Vanguard FTSE Social Index Fund (VFTAX)	0.275
Vanguard Plans – FTSE Social Index Portfolio	Nevada	Vanguard FTSE Social Index Fund (VFTAX)	0.25
Fixed Portfolio Options –  Social Index Equity	Maryland	Vanguard FTSE Social Index Fund (VFTAX)	0.34
Individual Portfolio –  Socially Responsible Portfolio	Texas	Vanguard FTSE Social Index Fund (VFTAX)	0.73
Individual Portfolio Options –  MA Climate Action Portfolio	Massachusetts	Fidelity Climate Action Fund (FCAEX)	Gross: 1.65 Net: 1.22

Considerations when picking a plan: Fees and State Tax Benefits

Fees Vary by State

It’s important to note that different state 529 plans can charge significantly different fees, even when they invest in the exact same mutual fund. Take VFTAX as an example: it’s used in seven different state portfolios, yet the fees vary widely. New York and Utah charge a modest 0.12%, while Pennsylvania’s fee is twice that, and Texas charges nearly six times more.

Some states offer additional tax incentives for state residents using their home state’s plans. This varies by state. For example, New York offers tax deductions for 529 contributions, whereas California does not offer state incentives. Ask a financial advisor or accountant about your own tax situation including when balancing fees and in-state tax incentives. 

Room for improvement: Why Age-Based (Target Enrollment Date) Funds Matter in 529 College Savings Plans

The three fossil-fuel-free 529 options are a start. However, true choice and portfolio diversification is noticeably lacking. Real freedom of choice for savers means having access to investments that cover both your values and investment style, meaning access to multiple climate-friendly options in every 529 plan that span the range of investment styles from conservative to aggressive and including bond funds.

529 plans often prominently feature age-based, sometimes also called, “enrollment date portfolios”. The investment strategy of these funds shift from more aggressive to more conservative as the beneficiary approaches the time of anticipated educational expenses. This is the most frequently used investment type for 529 savers. 

Unfortunately, no fossil free age-based 529 plans currently exist. California offers the only 529 age-based ESG fund, but it is composed of several Nuveen mutual funds (TISCX, TSONX, NUEM) that score Bs and Cs for their fossil fuel exposure by As You Sow. They score better than most age-based 529 funds but also illustrate that environmental social and governance (ESG) investment criteria does not necessarily mean fossil fuel free. 

Utah’s 529 customized plans offer the ability to build your own 529 age-based portfolio. Given Utah’s portfolio options including FTSE Social Index Fund made up of VFTAX, savers could construct their own fossil fuel free 529 plan. 

Take Action

If you find the lack of climate-friendly 529 options in your state’s plan frustrating, please consider writing to both your state legislators and state 529 fund managers to let them know your state’s plan is not meeting your needs. Also consider signing these petitions in Massachusetts, California and Oregon. 

Interested in the fossil fuel holdings of other savings accounts, like those in your retirement funds? You can evaluate what’s in a mutual fund or index fund using tools provided by Fossil Free Funds.

We all have a duty to leave behind a world that is better than the one we inherited. Fossil-free 529 college savings accounts are a meaningful way to adhere to that duty.  It’s an essential investment in our children’s future—a future that is sustainable, equitable, and full of promise.

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Disclaimer: Authors are not investment advisers as that term is defined under federal and state (California, Oregon and Massachusetts) laws and regulations. Authors do not provide financial planning, legal or tax advice. Nothing on this post shall constitute or be construed as an offering of financial instruments, or as investment advice or investment recommendations.

*As of August 15, 2025, we want to note that the VFTAX/Vanguard Social Index Fund contains 3 companies summing up to 0.41% of the fund’s total holdings that by some definitions would be considered fossil fuel companies. These companies are:  Exelon, which is a mainly nuclear utility but runs some fossil fuel energy plants, Blackstone – a private equity fund whose investments include oil/gas, and Ares, which helps oil/gas companies be more efficient. This could be why it gets a B rather than an A grade in Fossil Free Funds. It’s important to check your funds regularly because holding change.