SACRAMENTO, Calif.--(BUSINESS WIRE)--With the recent passing of Assembly Bill 340, authored by Assemblymember Chris M. Ward and sponsored by State Treasurer Fiona Ma, ScholarShare 529 account holders can now use 529 college savings accounts to cover registered apprenticeship program expenses, and make payments toward their student loan debt. The new law provides California families with more flexibility as they utilize 529 plans to save for future higher education expenses.
AB 340 conforms the state's current 529 college savings plan statute to the provisions of the federal “Setting Every Community Up for Retirement Enhancement” (SECURE) Act of 2019. The federal SECURE act allows for the use of 529 college savings account monies to pay for registered apprenticeship program expenses and student loan repayment without incurring any federal taxes. Now, AB 340 allows 529 account holders to use their funds for the same purposes without any California state tax implications.
“I am thrilled that AB 340 was signed into law as it gives families more options, and more peace of mind when considering how to pay for higher education costs,” said State Treasurer Fiona Ma, chair of the ScholarShare Investment Board. “The traditional college track should not be one size fits all, and this new law also gives students more options to choose a higher education path best suited to their own future,” continued Ma.
ScholarShare 529 serves as California’s official college savings plan. Administered by the ScholarShare Investment Board, ScholarShare 529 strives to improve college access and educational opportunities for children by providing families with a diverse set of investment options, tax-deferred growth, and withdrawals free from state and federal taxes when used for qualified higher education and expenses. Saving with 529 plans helps ease the financial burden on families who may otherwise be dependent on income or student loans to finance their education.
According to the Federal Reserve Bank of New York, national student loan debt has reached $1.7 trillion, with California being home to 3.8 million of the nation’s 45 million borrowers, the highest number of any state, as noted by the Federal Student Aid. The Institute for College Access & Success also estimates that the average class of 2019 college graduate in California owes about $21,485 in student loans.
For more information on AB 340, visit: https://leginfo.legislature.ca.gov.
To open a ScholarShare 529 account or get more information about the plan, visit www.ScholarShare529.com. For information about the ScholarShare Investment Board, visit www.treasurer.ca.gov/scholarshare, like ScholarShare 529 on Facebook at www.facebook.com/scholarshare529, subscribe to the YouTube channel at https://www.youtube.com/channel/UCtlSHU65BSCSpYCAmSVXl4Q and follow them on Twitter at @ScholarShare529.