California ScholarShare 529 College Savings Plan Review
Kim Finkle, MBA, Financial Advisor
The ScholarShare 529 is the official state-sponsored plan for California to make education affordable at schools such as such as Berkely, Stanford, and UCLA are in California. We will review California ScholarShare 529 plan and compare it with other 529 plans to determine if it is suitable for co-parents and their children. Should it be bought by only co-parents residing in California or is it also suitable for those who live outside California?
How Does The ScholarShare 529 Plan Work?
The SchoarShare 529 plan is administered by the ScholarShare Investment Board (SIB). TIAA-CREF Tuition Financing Incorporated is the official plan advisor to SIB. It offers equity and fixed income-based portfolios. A program can be selected based on their child's age, investment style, and risk tolerance. All contributions to accounts grow on a tax-deferred basis.
The plan is so popular that even California Senator Dianne Feinstein publicly endorses it.
It’s never too early to begin saving for college. ScholarShare 529 is California’s state sponsored, tax-free college savings plan. It offers families low-cost tools to prepare financially for school. Find more information on ScholarShare 529 plans here:https://t.co/rlLOaFur7P
— Senator Dianne Feinstein (@SenFeinstein) May 24, 2021
Enrollment Requirement
Any U.S. citizen or resident with a valid Social Security number or taxpayer ID can open an account with the Golden State ScholarShare. The account owner can also designate a beneficiary who is a future student. Anyone related or unrelated to the beneficiary can contribute to the account.
Educational Programs Funded By ScholarShare
- Apprenticeship - This plan can pay for students who are opting for apprenticeships over a four-year college degree. The plan allows a student to pay books, equipment, fees, and supplies for on-the-job training with classroom instruction. The apprenticeship program must be registered with the U.S. Department of Labor.
- Vocational School - The plan can be used to pay for a vocational school anywhere in California or USA. A future tradesman/woman can pay for all qualified expenses including tuition, fees, housing, meal plans, books, supplies, computer technology, and equipment.
- Graduate and Undergraduate College - The plan can pay for qualified expenses including tuition, fees, housing, meal plans, books, supplies, computer technology, and equipment at any college or university in the U.S. as well as some international schools.
- Continuing Education - The reality today is that to stay competitive in the job market we have to continue upgrading our skills. That may require us to go back to school to pursue a continuing education program or a degree program. The plan can pay for tuition, fees, housing, meal plans, books, supplies, computer technology, and equipment at a qualified institution.
A financial blogger, a former engineer, and attorney Justin Root of Good has saved up for his children's college using the California ScholarShare. He has publicly tweeted about his first successful withdrawal.
Just made my first 529 withdrawal to cover 2021 college expenses for my kids. Just textbooks this year.
2022 is when the "real" college spending starts (maybe).
But that's what we saved it for! pic.twitter.com/w0spqXTQQH
— Justin Root of Good (@RootofGoodBlog) December 16, 2021
ScholarShare 529 Qualified Colleges
Public Universities:
- University of California (UC) System:
- UC Berkeley
- UC Davis
- UC Irvine
- UCLA
- UC Merced
- UC Riverside
- UC San Diego
- UC San Francisco
- UC Santa Barbara
- UC Santa Cruz
- California State University (CSU) System:
- California State University, Bakersfield
- California State University, Channel Islands
- California State University, Chico
- California State University, Dominguez Hills
- California State University, East Bay
- California State University, Fresno
- California State University, Fullerton
- California State University, Humboldt
- California State University, Long Beach
- California State University, Los Angeles
- California State University, Maritime Academy
- California State University, Monterey Bay
- California State University, Northridge
- California State University, Polytechnic, Pomona
- California State University, Sacramento
- California State University, San Bernardino
- California State University, San Diego
- California State University, San Francisco
- California State University, San Jose
- California State University, San Marcos
- California State University, Stanislaus
- Other Public Universities:
- California Maritime Academy
- California National University
- California Polytechnic State University, San Luis Obispo
- California State Polytechnic University, Humboldt
- San Francisco State University
- San Jose State University
- Sonoma State University
Private Universities:
- Research Universities:
- Claremont McKenna College
- Harvey Mudd College
- Occidental College
- Pomona College
- Scripps College
- Stanford University
- University of Southern California (USC)
- Liberal Arts Colleges:
- Chapman University
- Dominican University of California
- Menlo College
- Mount St. Mary's University
- Santa Clara University
- Thomas Aquinas College
- University of Redlands
- Whittier College
- Religious Universities:
- Azusa Pacific University
- Biola University
- Concordia University Irvine
- Hope International University
- Notre Dame de Namur University
- Point Loma Nazarene University
- Saint Mary's College of California
- Simpson University
- The Master's University
- Vanguard University
- Westmont College
- Other Private Universities:
- California Institute of Technology (Caltech)
- ArtCenter College of Design
- California College of the Arts
- Fashion Institute of Design and Merchandising
- Otis College of Art and Design
- Woodbury University
Community Colleges
- Alameda County:
- Alameda College
- Berkeley City College
- College of Alameda
- Laney College
- Merritt College
- Ohlone College
- Peralta Community College District Office
- Amador County:
- Butte County:
- Calaveras County:
- Contra Costa County:
- Contra Costa College
- Diablo Valley College
- Los Medanos College
- Del Norte County:
- El Dorado County:
- Folsom Lake College
- Sierra College
- Fresno County:
- Clovis Community College
- Fresno City College
- Reedley College
- West Hills College Coalinga
- West Hills College Lemoore
- Glenn County:
- Humboldt County:
- Imperial County:
- Inyo County:
- Kern County:
- Bakersfield College
- Cerro Coso Community College
- Kings County:
- West Hills College Lemoore
- Lake County:
- Santa Rosa Junior College
- Los Angeles County:
- Citrus College
- Compton College
- East Los Angeles College
- El Camino College
- Los Angeles City College
- Los Angeles Harbor College
- Los Angeles Mission College
- Los Angeles Pierce College
- Los Angeles Trade-Technical College
- Los Angeles Valley College
- Santa Monica College
- West Los Angeles College
- Madera County:
- Marin County:
- Mariposa County:
- Mendocino County:
- Santa Rosa Junior College
- Merced County:
- Modoc County:
- Mono County:
- Monterey County:
- Hartnell College
- Monterey Peninsula College
- Napa County:
- Nevada County:
- Orange County:
- Cypress College
- Fullerton College
- Placer County:
- Plumas County:
- Riverside County:
- Moreno Valley College
- Norco College
- Palo Verde College
- Riverside City College
- Sacramento County:
- American River College
- Cosumnes River College
- Sacramento City College
- San Benito County:
- San Bernardino County:
- Barstow Community College
- Chaffey College
- Crafton Hills College
- Victor Valley College
- San Diego County:
- Cuyamaca College
- Grossmont College
- MiraCosta College
- Palomar College
- San Diego City College
- San Diego Mesa College
- Southwestern College
- San Francisco County:
- City College of San Francisco
- San Joaquin County:
- Delta College
- San Joaquin Delta College
- San Luis Obispo County:
- Cuesta College
- Hancock College
- San Mateo County:
- College of San Mateo
- Skyline College
- Santa Barbara County:
- Allan Hancock College
- Santa Barbara City College
- Santa Clara County:
- De Anza College
- Evergreen Valley College
- Foothill College
- Mission College
- San Jose City College
- Santa Cruz County:
- Cabrillo College
- Gavilan College
- Shasta County:
- Siskiyou County:
- Solano County:
- Sonoma County:
- Santa Rosa Junior College
- Stanislaus County:
- Modesto Junior College
- Stanislaus State University
- Sutter County:
- Tehama County:
- Trinity County:
- Tulare County:
- College of the Sequoias
- Porterville College
- Tuolumne County:
- Ventura County:
- Moorpark College
- Oxnard College
- Ventura College
- Yolo County:
- Woodland Community College
- Yuba County:
Technical Colleges
- Northern California:
- American River College: Sacramento (Aviation Maintenance, Automotive Technology, Construction Technology)
- Cosumnes River College: Sacramento (Biotechnology, Computer Networking, Dental Assisting)
- Folsom Lake College: Folsom (Computer Networking, Cybersecurity, Welding Technology)
- Laney College: Oakland (Automotive Technology, Culinary Arts, Graphic Design)
- Napa Valley College: Napa (Cosmetology, Culinary Arts, Viticulture and Enology)
- Santa Rosa Junior College: Santa Rosa (Automotive Technology, Cosmetology, Medical Assisting)
- Shasta College: Redding (Computer Information Systems, Dental Hygiene, Welding Technology)
- Solano Community College: Fairfield (Aviation Maintenance, Culinary Arts, Digital Media)
- Yuba College: Marysville (Automotive Technology, Electronics Technology, Medical Assisting)
- Central California:
- Allan Hancock College: Santa Maria (Automotive Technology, Cosmetology, Welding Technology)
- Cuesta College: San Luis Obispo (Automotive Technology, Culinary Arts, Geographic Information Systems)
- Fresno City College: Fresno (Construction Technology, Cosmetology, Dental Assisting)
- Hancock College: Santa Maria (Automotive Technology, Cosmetology, Welding Technology)
- Hartnell College: Salinas (Agriculture, Automotive Technology, Culinary Arts)
- Madera Community College: Madera (Automotive Technology, Cosmetology, Nursing)
- Merced College: Merced (Automotive Technology, Cosmetology, Nursing)
- Monterey Peninsula College: Monterey (Automotive Technology, Culinary Arts, Hospitality Management)
- Reedley College: Reedley (Agriculture Technology, Cosmetology, Dental Assisting)
- San Joaquin Delta College: Stockton (Automotive Technology, Cosmetology, Welding Technology)
- Southern California:
- Antelope Valley College: Lancaster (Automotive Technology, Cosmetology, Welding Technology)
- Citrus College: Glendora (Automotive Technology, Culinary Arts, Medical Assisting)
- Compton College: Compton (Automotive Technology, Cosmetology, Nursing)
- Crafton Hills College: Yucaipa (Automotive Technology, Culinary Arts, Welding Technology)
- East Los Angeles College: Monterey Park (Automotive Technology, Cosmetology, Nursing)
- El Camino College: Torrance (Automotive Technology, Cosmetology, Medical Assisting)
- Fullerton College: Fullerton (Automotive Technology, Cosmetology, Nursing)
- Los Angeles City College: Los Angeles (Automotive Technology, Culinary Arts, Welding Technology)
- Los Angeles Trade-Technical College: Los Angeles (Automotive Technology, Cosmetology, Welding Technology)
- MiraCosta College: Oceanside (Automotive Technology, Cosmetology, Nursing)
- Norco College: Norco (Automotive Technology, Cosmetology, Welding Technology)
- Palo Verde College: Blythe (Automotive Technology, Cosmetology, Welding Technology)
- Palomar College: San Marcos (Automotive Technology, Cosmetology, Welding Technology)
- Rio Hondo College: Whittier (Automotive Technology, Cosmetology, Nursing)
- Santa Monica College: Santa Monica (Automotive Technology, Cosmetology, Nursing)
- Victor Valley College: Victorville (Automotive Technology, Cosmetology, Welding Technology)
Benefits of ScholarShare 529 Plan
- Tax-Deferred - All earnings on the plan are tax-deferred. The qualified distributions are also exempt from federal taxes if residency requirements are met. In addition to that, a couple can deduct up to $10,000 per year and a divorced or separated parent can deduct up to $5,000 tax-free.
- Federal Tax Exemption - All qualified distributions for up to $10,000 per student per year are exempt from federal income tax.
- California State Tax - The qualified distributions are also exempt from the state tax.
- Supports in-state and out-of-state schools - You can use your savings for schools inside Arkansas or outside.
- Estate Planning - A married couple can take advantage of five years' worth of federal tax-free gifts at one time and contribute $150,000. For single, divorced, and separated parents, the limit is $75,000 per person.
- Rollover - You can also roll over from another state's plan.
- Flexibility - Designate a new beneficiary if the current beneficiary doesn't want to attend college.
- Plan Limit - The plan limit is $529,000, much higher than other states.
- Loan Repayment - The plan allows repayment of up to $10,000 on any qualified education loan of either a 529 plan beneficiary or a sibling of the beneficiary.
How to Enroll
- You can enroll by going to the ScholarShare plan website.
Criticism for ScholarShare 529 Plan
- Since the plan mainly invests in the stock market, the plan beneficiary may not have enough funds due to the market fluctuations.
- Some distributions may be taxable.
- It gives an unfair advantage to the rich since they can save faster.
Co-parents and ScholarShare 529
The California 529 plan can be a good option for divorced and separated parents residing in and out of the state. It can also be a good investment for those who want to send their child to a school in California. The high plan limit allows parents to save more than enough to fund their child's education anywhere in the US. It is a perfect plan if you have an overachiever in the family who wants to attend Stanford.
Since co-parents have separate finances and only one person can start a ScholarShare plan, both parents can start one separately for the same child, and fund half of the balance. This way, if the child decides not to attend college or they need to withdraw funds for some other reason, or assign a different beneficiary for their portion, they can do so easily. Alternately, one parent can fund the entire plan and the other one can reimburse them for their half. Another option is that they can start 529 plans in different states and fund half each.
Comparison With Other 529 Plans
| Feature |
California |
Arizona |
Washington |
| Max Contribution |
$529,000
|
$518,000 |
4 Yr. Tuition |
| Full In-state Tuition |
Yes |
Yes |
Yes |
| Full Out-of-state Tuition |
Yes |
Yes |
No (Partial) |
| State Tax Exemption |
Yes |
Yes |
N/A |
| Federal Tax Exemption |
Yes |
Yes |
Yes |
| Primary Contributors |
Anyone |
Anyone |
Anyone |
| Student Loan Repayment Option |
Yes |
Yes |
No |
| Plan Review |
|
Link |
Link |
529 Plans By State
1. Alaska 529 Plan
2. Alabama 529 Plan
3. Arizona 529 Plan
4. Arkansas 529 Plan
5. California 529 Plan
6. Colorado 529 Plan
7. Connecticut 529 Plan
8. Delaware 529 Plan
9. Florida 529 Plan
10. Georgia 529 Plan
11. Hawaii 529 Plan
12. Idaho 529 Plan
13. Illinois 529 Plan
14. Indiana 529 Plan
15. Iowa 529 Plan
16. Kansas 529 Plan
17. Kentucky 529 Plan
18. Louisiana 529 Plan
19. Maine 529 Plan
20. Maryland 529 Plan
21. Massachusetts 529 Plan
22. Michigan 529 Plan
23. Minnesota 529 Plan
24. Mississippi 529 Plan
25. Missouri 529 Plan
26. Montana 529 Plan
27. Nebraska 529 Plan
28. Nevada 529 Plan
29. New Hampshire 529 Plan
30. New Jersey 529 Plan
31. New Mexico 529 Plan
32. New York 529 Plan
33. North Carolina 529 Plan
34. North Dakota 529 Plan
35. Ohio 529 Plan
36. Oklahoma 529 Plan
37. Oregon 529 Plan
38. Pennsylvania 529 Plan
39. Rhode Island 529 Plan
40. South Carolina 529 Plan
41. South Dakota 529 Plan
42. Tennessee 529 Plan
43. Texas 529 Plan
44. Utah 529 Plan
45. Vermont 529 Plan
46. Virginia 529 Plan
47. Washington 529 Plan
48. West Virginia 529 Plan
49. Wisconsin 529 Plan
50. Wyoming 529 Plan
51. DC 529 Plan
Warning:
This post is neither financial, health, legal, or personal advice nor a substitute for the advice offered by a professional. These are serious matters, and the help of a professional is recommended as it can impact your future.
