Colleges and universities can be expensive. Who wants to take on loans it may take years to pay off? At the same time, we all want the upward mobility, higher income potential, and equal shot at living the California dream that tends to follow getting a higher education.
So, what’s a family to do?
State Treasurer Fiona Ma recommends you consider opening a California ScholarShare 529 college savings plan as soon as you can.
If you act now, you could even qualify for a matching contribution!
Editor’s note: As this issue entered production we learned that the Legislature approved a resolution Treasurer Ma sponsored declaring May 29 to be 529 College Savings Day in California. The Treasurer sends a hearty “thank you” to Senator Connie Leyva, D-San Bernardino, the author of Senate Concurrent Resolution 37.
May 29 is National 529 College Savings Day and the state’s program is celebrating by offering a special $50 match promotion to anyone who opens a new ScholarShare 529 account between May 28 and May 31 with an initial contribution of $50 or more.
To be eligible, the account owner must also sign up for an automatic contribution plan of $25 or more for a minimum of six months. The matching deposit of $50 will be made to your account by January 31, 2020. There is a limit of one matching deposit for each new account opened for a new beneficiary.
The $50 match is not the only reason to start saving, of course. Studies show that students with a dedicated college savings account in their name are seven times more likely to attend college than those without a savings account.
Starting to save now can make a big difference with college costs skyrocketing. Over the past 40 years, tuition has risen two or three times faster than inflation. And, according to the Federal Reserve Bank of New York, student debt has reached an all-time high of $1.5 trillion nationally – up from $620 billion in 2008.
Your ScholarShare 529 account earnings on investments are tax-free, as long as the funds are used for qualified higher education expenses. Qualified expenses can include tuition, fees, books, supplies, computer equipment, and the cost of room and board.
There is a range of investment options to select from. And ScholarShare 529 funds may be used at eligible schools across the U.S. and around the world – not just at California colleges, universities, and trade schools.
ScholarShare 529 investment earnings are already tax-deferred under IRS rules. But Treasurer Ma is working with Assembly Majority Leader Ian Calderon, D-Whittier, to make it even a better deal, Assembly Bill 211 would allow account holders who contribute to one or more of their ScholarShare 529 accounts to also receive an annual state income tax deduction of $5,000 for single taxpayers, $10,000 for those who file jointly.
California launched its 529 plan in 1999 and its growth has been phenomenal, rising from $3.2 billion in 2009 to more than $9 billion in May 2019. Today, there are more than 322,000 ScholarShare 529 accounts.
ScholarShare 529’s associated Workplace Savings Program is also a growing success. This program supports employers who would like to offer ScholarShare 529 as a voluntary benefit to their employees. Nearly 1,000 employers in California are currently participants.
ScholarShare 529 and Treasurer Ma also promote the importance of getting students ready for higher learning through an annual “Scholar Dollars” awards program. Scholar Dollars recently distributed more than $300,000 to 20 winning K-8 schools that create college-going cultures through programs that engage, captivate, and inspire students.
Earlier this month the Treasurer, who chairs the ScholarShare Investment Board that oversees the ScholarShare 529 plan, personally delivered a $5,000 check to LUCHA, an elementary school in San Jose that is using its award money to buy library books and learning technology.
Have we mentioned how helpful it is when communicating with elementary school students to be accompanied by your dog? Our dog? Diploma Dog, of course!
For additional information, check out ScholarShare 529’s new digital information kit. You can find information here: www.scholarshare529.com/kit
Note: Each month we will be sharing information on one of our BCAs and explain how the programs behind the acronym are enhancing the lives of Californians all across the state -- and how you, your family, or your business can share in, and contribute to, California's prosperity