Why Scholarshare?

This post was sponsored by Scholarshare.

As I mentioned in a previous post, I’ve partnered with Scholarshare this year to provide information on California’s 529 college savings plan. Today, I wanted to provide some information about what sets this plan apart as an advantageous option. Here are some of the reasons we went with Scholarshare:

There are major tax breaks

529 plans offer significant income tax breaks. Although your contributions are not deductible on your federal tax return, your investment grows tax-deferred, and distributions to pay for college costs are federally tax-free.

It’s easy to start and easy for others to give

The minimum initial contribution to open a ScholarShare account is now only $25. In additional, anyone can give to a ScholarShare account at any time. All you need is the child’s name and account number.  (I think this may be the new birthday request from my kid’s grandparents. Is it tacky to hand out deposit slips before Christmas?)

It’s flexible

If a child gets a scholarship they can withdraw the savings TAX FREE and use it for something else. It’s great for grandparents to maintain control: If kids don't go to college, they don't get it and grandparents can redesignate the funds.

The donor retains control of funds

If you open an account, you stay in control of the account. With few exceptions, the named beneficiary has no rights to the funds and it can be transferred to another person at any time. So, let’s say for example that my nephew Austin decided not to go to college. Instead of having to give him the money we saved, we could have simply named one of our own kids as the beneficiary instead.  This allows parents to save for education without risking that the child will blow the money on

something else. You are the one who calls the shots; you decide when withdrawals are taken and for what purpose. You can even use it for your own education if the child doesn’t go.

It’s a low-maintenance fund

A 529 plan is an easy way to invest for college. Once you decide which 529 plan to use, you complete a simple enrollment form and make your contribution (or sign up for automatic deposits). Then you can relax and forget about it if you like. The ongoing investment of your account is handled by the plan, not by you.  The fund utilizes age-based portfolios, with higher risk funds for younger beneficiaries and lower risk funds as they approach high school.

It doesn’t make a huge dent in financial aid potential.

A 529 account owned by a parent for a dependent student is reported on the federal financial aid application (FAFSA) as a parental asset. Parental assets are assessed at a maximum 5.64% rate in determining the student's Expected Family Contribution (EFC).  Therefore, a child who is eligible for financial aid will most likely still be eligible, even taking into account the 529 in their name

If you live in California, I definitely recommend check out Scholarshare.  This plan has no brokerage fees. The new ScholarShare plan significantly reduces fees, expands the investment lineup, and offers online and mobile tools to make California’s 529 plan more accessible and easier to manage. Under the revamped plan, fees will be reduced by approximately 30 percent, making ScholarShare one of the lowest cost 529 plans in the country.

ScholarShare is hosting a “529 Day” sweepstakes on its Facebook page, where you can enter for the chance to win $2,500 toward an existing or new ScholarShare college savings account. The sweepstakes will begin at 8 a.m. PT on Friday, May 23 and end at 8:59 p.m. PT on Thursday, May 29. The winner will be randomly selected and announced on Friday, May 30.

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