Home Family All About the ScholarShare 529 College Savings Plan

All About the ScholarShare 529 College Savings Plan

by TerriAnn
Education | Find out more about what a 529 college savings plan is and learn about the ScholarShare program in California. Really great points to consider if you have kids of any age!

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When it comes to education after high school, the sheer number of options is mind-boggling. So, to clear up some confusion, I wanted to share with you some of the information I gleaned during my meeting with ScholarShare last month.

Education | Find out more about what a 529 college savings plan is and learn about the ScholarShare program in California. Really great points to consider if you have kids of any age!

Why Should Parents Consider a 529 College Savings Plan?

8 out of 10 young adults graduate college with some $28,400 in student loans and 2015 saw the most indebted class with a $35,000 debt. Paying these loans off often limit your kids’ full funds and force them to postpone major life decisions like moving abroad, traveling, or even starting a family. And, for the first time, these are overlapping as parents and grandparents are now retiring with those same education debts still haunting them. So, any way you can lessen that load now will help.

Common Misconceptions

Many imagine that investing in a college savings plan means that they have to put away 100% of their children’s future college tuition. That would equal to about $1725 per month from childhood. While that would be nice in an ideal world, saving that much each month is not mandatory.

One major point that was stressed during our event was that a 529 plan is “just one piece of the pie when it comes to college savings.” Other pieces of that “pie” are made up of current income, help from family, if the student has a job, financial aid, scholarships, etc.

Education | Find out more about what a 529 college savings plan is and learn about the ScholarShare program in California. Really great points to consider if you have kids of any age!

Speaking of financial aid and scholarships, it would be unwise to assume these would cover the entirely of their children’s education. These usually only cover a portion of costs or may only apply to the first year. When it’s time to pay out of pocket, the financial shock might be too much to bear.

What is ScholarShare?

ScholarShare is California’s 529 College Savings Plan, a state-sponsored, tax-advantaged investment vehicle designed to help and encourage families to save for future qualified higher education expenses. Just as a 401(k) plan is to retirement savings, a 529 college savings plan is for college savings.
– Official ScholarShare verbiage.

The benefits of this program are the low fees (3rd lowest in the country) and the professionally managed accounts with 19 different portfolios by TIAA-CREF. You can choose age-based investments, to direct your funds into conservative accounts, or to not invest in stocks at all (called Guaranteed Principle Plus). You can Rebalance, or change accounts, twice a year.

To take advantage of the ScholarShare program, neither you nor the beneficiary are required to be a California resident. Family and friends are also able to contribute to the account. There are no income or age restrictions in using a plan.

The funds in your ScholarShare program can be used at 4-year colleges and universities, many 2-year institutions, graduate schools, doctorate programs, vocation and technical schools, as well as many schools abroad. You don’t receive a tax break on accrued funds but you can use them tax-free on qualifying purchases.

ScholarShare 529 College Savings Plan Questions

Likely, this summary only covered a few of your concerns about ScholarShare and 529 college savings plans in general. Feel free to leave a comment below with any other questions you might have and I’ll see if I can get an answer for them.

This post is part of my participation as a ScholarShare Ambassador, which includes compensation and a one-day event with travel expenses covered. All opinions are my own.

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