Compare Ways to Save
When it comes to saving money for college, there are many options available—each with their own set of benefits. The best option for you depends on multiple factors, like your savings goals, risk tolerance and investment preferences.
ScholarShare 529 checks all the right boxes
529 plans are one of the most popular ways families choose to save for college. Other common methods include Roth IRAs or a standard bank savings account.*
ScholarShare 529 
1
- yes checkmark
Tax-deferred growth
- yes checkmark Tax-free distributions for qualified education expenses
- yes checkmark No income restrictions
- yes checkmark Financial-aid friendly
- Maximum of 5.6% of account balance counts towards expected family contributions for accounts held by parents.
- yes checkmark High annual contribution limits
- $529,000 maximum account balance limit per beneficiary
- yes checkmark Investment options
- yes checkmark Available portfolios designed specifically for education savings
Roth IRA2
- yes checkmark Tax-deferred growth
- potential question mark No tax-free distributions for education expenses unless account owner is age 59 ½ or older and account has been established for 5 years
- no x Not available to higher income families
- Maximum $144,000 single/$214,000 married maximum adjusted gross income for 2022
- no x Not financial-aid friendly
- Although Roth IRA assets are not included in the expected family contribution, up to 47% of withdrawal count towards expected family contributions (in subsequent year).
- no x Limited annual contributions
- Maximum $6,000 contribution ($7,000 for those age 50 and older)
- yes checkmark Investment options
- no x Typically available portfolios are designed for retirement not education savings
Bank Savings Account3
- no x No tax-deferred growth
- no x Income is taxed annually when earned
- yes checkmark No income restrictions
- potential question mark Sometimes financial-aid friendly
- For accounts owned by student up to 20% of balance can count toward expected family contribution. For parent owned accounts, up to 5.6% of balances can count toward expected family contributions.
- yes checkmark No annual contribution limit
- no x No investments options
- no x Typically no option for portfolios developed specially for education savings
Good news—money saved in a 529 does not disqualify students for financial aid. 529 assets are typically treated as belonging to the parent (or grandparent, etc.) and count less in Expected Family Contribution (EFC) calculations than assets held in the child’s name.
Learn more at https://studentaid.gov/ or check with the schools you are considering.
Graph Footnotes
- *There are material differences between ScholarShare 529, Roth IRAs and bank savings accounts. This material does not take into account any specific objectives or circ*mstances of any particular investor, or suggest any specific course of action. Be sure to consult your legal or tax professional for tax advice.↩
Financial aid video
Learn why a 529 account can have less of an impact on financial aid eligibility than assets owned by the student.
More reasons people choose ScholarShare 529
- With ScholarShare 529, any growth you see over time won’t be subject to taxes down the line if used for qualified higher education expenses.
- ScholarShare 529 savings do not disqualify students from financial aid and count less in Expected Family Contribution than assets held in the child’s name.4
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ScholarShare 529
Have any questions about ways to save for education? We have answers.
ScholarShare 529 provides a unique set of benefits that can mean more flexibility and growth potential, including:
- Tax-free qualified withdrawals
- Low fees and expenses
- Smart and easy to choose investment options
- Favorable financial aid treatment
- Use for a wide range of education expenses and programs—in California and around the world
Get more details and compare savings options.
No. Your ScholarShare 529 funds can be used at any accredited university in the country—and even some abroad. This includes public and private colleges and universities, apprenticeships, community colleges, graduate schools and professional schools.1 Up to $10,000 annually can be used toward K-12 tuition (per student).2 In addition, your 529 can be used for student loan repayment up to a $10,000 lifetime limit per individual.1 Review a list of qualifying expenses and the state tax treatment of withdrawals for these expenses in the Plan Description.
Footnotes
- 1Withdrawals for registered apprenticeship programs and student loans can be withdrawn free from federal and California income tax. If you are not a California taxpayer, these withdrawals may include recapture of tax deduction, state income tax as well as penalties. You should talk to a qualified professional about how tax provisions affect your circ*mstances. Read about eligible education expenses. Apprenticeship programs must be registered and certified with the Secretary of Labor under the National Apprenticeship Act.↩
- 2Withdrawals for tuition expenses at a public, private or religious elementary, middle, or high school can be withdrawn free from federal tax. For California taxpayers these withdrawals are subject to state income tax and an additional 2.5% California tax. You should talk to a qualified professional about how tax provisions affect your circ*mstances.↩
ScholarShare 529 provides the maximum allowable 529 plan tax benefits available to California taxpayers. When you contribute to a ScholarShare 529, any account earnings can grow federal and California income tax-deferred until withdrawn. In addition, withdrawals used to pay for qualified education expenses are free from federal and California income tax.
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