The State Legislature unanimously passed Assembly Bill (AB) 340 on June 4, 2022.
This legislation conforms state law to the provisions of the federal Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 that allow for the use of 529 college savings account monies to pay for qualified apprenticeship expenses and repay up to $10K in student loan debt per beneficiary.
What does this mean for ScholarShare 529 account owners?
AB 340 helps families deal with the high cost of higher education, be it college or apprenticeships. This legislation authored by Assemblymember Christopher Ward and sponsored by California State Treasurer Fiona Ma modernizes how funds in a 529 college savings account can be used to help families pay for future higher education expenses. It allows them to set aside tax-deferred savings for qualified expenses related to apprenticeship programs without fear of having their earnings taxed and penalized by the state.
“Through this action, Californians will be able to utilize their ScholarShare and 529 plans for expenses related to eligible apprenticeship programs and payments on qualified student loan debt. Given the impact that the COVID-19 pandemic has had on the economy, California families are looking for greater flexibility with their 529 savings to ensure a child’s access to higher education.” Assemblymember Christopher Ward
National student loan debt is over $1.6 trillion. California is home to 3.8 million of the nation’s 45 million borrowers. California graduates owe an average of $21,485 in student loans. AB 340 gives families greater flexibility with their 529 savings by ensuring their children have access to whichever type of qualified higher education best fits their unique professional aspirations.
“As Chair of the ScholarShare Investment Board, it is a top priority of mine to help families save for higher education and mitigate against the growing student loan debt crisis that has worsened in recent years.” California State Treasurer Fiona Ma