News & Press Releases
Making smart decisions about college savings
It’s good for employees. Good for the state. Good for the workforce.
A 529 college savings plan is a win-win-win, which is why more California companies are offering the benefit to their employees – and why more companies should consider doing the same.
It’s no secret that college is expensive, and costs are increasing exponentially: From 2007 to 2017, tuition rates at the University of California, California State University and California Community College increased 100 percent, 117 percent and 130 percent, respectively. The snowballing costs are creating financial burdens for students and parents alike. Students are taking out loans and graduating with more debt than ever before. Consequently, student loan debt recently reached $1.5 trillion nationally, up from $676 billion in 2008.
The good news is more California companies are helping bridge the gap by offering 529 college savings plans as part of their benefits packages. More than 900 California employers –including 11 of the state’s largest businesses and eight of the 10 best companies to work for in the U.S. – are already offering the state’s ScholarShare 529 college savings plans to their employees. As of June 30, 2018, $8.6 billion in assets, across nearly 310,000 accounts, has been invested in the plan.
For companies not offering a workplace college savings option, September – National College Savings Month – is the perfect time to consider adding one. Here are a few advantages of and considerations for 529 workplace savings plans:
- Small investment, with a meaningful payoff. College savings programs, such as ScholarShare 529, are easy and free for employers to manage, yet potentially worth thousands of dollars to employees through 100 percent tax-free growth.
- Performance and fees. 529 college savings plans offer tax benefits, but they aren’t all created equal. California’s ScholarShare 529 college savings plan has a strong track record of investment returns and competitive fees.
- Effortless college savings. A 529 workplace savings program makes it easy for employees to save for higher education through a simple payroll deduction process. Using this approach, families can accumulate money for a range of qualified expenses at most trade schools, colleges and universities across the country and the world.
- A recruitment and retention tool. More than 70 percent of families who want to open a 529 plan don’t know the steps involved, according to savingforcollege.com's Annual College Savings Survey. By serving as a conduit to college savings, employers are delivering a potentially attractive recruitment and retention tool.
- Fortify fiscal health and the workforce. A 529 plan increases access to college by minimizing financial barriers. This translates to more Californians accessing higher education and reduces the skills gap in the workforce while boosting the state’s fiscal health.
Adding a college savings option to a company’s benefits suite can positively and genuinely impact the lives of employees, the workforce and everyone in California. To learn more about the state’s ScholarShare 529 workplace savings program, visit www.ScholarShare529.com/employer.
Julio Martinez is the executive director of the ScholarShare Investment Board.