By Stephanie Paniagua |Staff Writer|
California’s leading college savings plan is about to become the nation’s cheapest savings plan.
In a letter to ScholarShare participants, the ScholarShare Investment Board announced their excitement for their upcoming program transition.
“We’re happy to report that in early November, we will introduce a new Plan Manager, a new investment lineup and a significant reduction in fees which will make ScholarShare among the lowest cost 529 plans in the country,” the letter stated.
ScholarShare is also known as California’s 529 plan, which is a college savings plan sponsored by the state.
The major benefit of ScholarShare participants is the perk of paying a low plan fee between 0.18 and 0.62 percent. Previously the fee ranged from 0.25 and 1.06 percent, according to scholarshare.com.
The new plan manager for ScholarShare is TIAFF-CREF Tuition Financing which manages teachers’ retirements accounts. ScholarShare’s previous manager was Fidelity Investments.
The ScholarShare’s web site reported several benefits that participants will receive due to the transition. Under TIAFF-CREF Tuition Financing, participants will be provided with an increase of options for investment portfolios, easier access to the participant’s account through the enhancement of web tools as well as account accessibility through smartphones.
The 529 college savings plans such as ScholarShare possess tax advantages and investment benefits for both California residents and out-of-state residents.
Fidelity.com reports that a participant’s earnings are tax deferred. In addition, any spending of your savings is free from federal income tax as long as the money is used for educational expenses.
College savings under 529 plans assist in paying tuition and book costs at almost any two or four year university, vocational school and technological school across the nation. They can also be applied to eligible participating foreign institutions.
One other perk of investing in 529 college savings plans is that it is not limited to just parents saving for their children, but students can save for their own tuition.
Fidelity.com reports that anyone that is 18 years or older can have an account. This means that you can work and save for college at the same time.
Michelle Fuller is a full-time employee at the accounting department in University Enterprises Corporation at CSUSB. She is also a part-time student and mother of two children.
“I currently have a savings account for my children, but this is the first I have heard about the ScholarShare 529 college savings plan,” said Fuller. “Now I plan to do a little bit more research to see if this would be the better route to save for my children’s college education,” she said.
Fuller further expressed that although she would also benefit from a savings plan, since she is taking classes for her accounting degree, she wants to take care of her children’s future first.
Other states have college savings plans as well.
According to mnsaves.org, Minnesota is also managed under TIAA-CREF Tuition Financing, but their plan fees range from 0.512 to 0.612 percent.
New York’s college savings program, known as Direct Plan, is managed by Upromise Investments Inc. However, their plan fee goes only as low as 0.25 percent, reports nysaves.s.upromise.com.
The ScholarShare Investment Board chose TIAFF-CREF Tuition Financing as their new plan manager since Fidelity Investment’s contract was reaching its expiration date.
To learn more visit the ScholarShare website at www.scholarshare.com/.