MEMBERS BILL LOCKYER, CHAIRMAN State Treasurer MICHAEL COHEN Director of Finance KAREN STAPF WALTERS Executive Director State Board of Education HAL GEIOGUE Governor Appointee CA Student Aid Commission PAUL MARTIN Governor Appointee Member at Large CHRISTOPHER JENNINGS Speaker Appointee RHONDA JOHNSON Senate Rules Committee Appointee EXECUTIVE DIRECTOR Arlene Greene 915 Capitol Mall, Room 105 Sacramento, CA 95814 p (916) 651-6380 f (916) 589-2835 [email protected]www.treasurer.ca.gov/scholarshare SCHOLARSHARE INVESTMENT BOARD November 2014 Dear ScholarShare Plan Account Owner, You are among more than 255,000 Californians who have taken the wise step of investing in your family’s higher education goals. Together you have entrusted the ScholarShare College Savings Plan with over $6 billion in contributions. ScholarShare is in its 15th year and qualified redemptions for college-bound beneficiaries are at an all-time high. We’re proud and excited to see the Plan working as intended – participants are paying for higher education expenses with contributions and earnings from years of dedicated saving. For those of you with younger beneficiaries, keep up the good work! You won’t regret it. Each year we are required to provide you information on investment performance, current college cost trends, contact information for your legislators and updates on changes to the Plan. The Report on Higher Education includes this information, in addition to several featured articles. On behalf of the ScholarShare Investment Board, thank you for investing in California’s 529 College Savings Plan. If you have questions regarding your account, or about the Plan in general, call our toll-free number, 1-800-544-5248, or visit scholarshare.com. We welcome your questions and comments. Sincerely, Arlene Greene Executive Director ScholarShare Investment Board
Transcript
MEMBERS BILL LOCKYER, CHAIRMAN
State Treasurer
MICHAEL COHEN Director of Finance
KAREN STAPF WALTERS Executive Director
State Board of Education
HAL GEIOGUE Governor Appointee
CA Student Aid Commission
PAUL MARTIN Governor Appointee
Member at Large
CHRISTOPHER JENNINGS Speaker Appointee
RHONDA JOHNSON Senate Rules Committee
Appointee
EXECUTIVE DIRECTOR Arlene Greene
915 Capitol Mall, Room 105 Sacramento, CA 95814 p (916) 651-6380 f (916) 589-2835 [email protected] www.treasurer.ca.gov/scholarshare
SCHOLARSHARE INVESTMENT BOARD
November 2014 Dear ScholarShare Plan Account Owner, You are among more than 255,000 Californians who have taken the wise step of investing in your family’s higher education goals. Together you have entrusted the ScholarShare College Savings Plan with over $6 billion in contributions. ScholarShare is in its 15th year and qualified redemptions for college-bound beneficiaries are at an all-time high. We’re proud and excited to see the Plan working as intended – participants are paying for higher education expenses with contributions and earnings from years of dedicated saving. For those of you with younger beneficiaries, keep up the good work! You won’t regret it. Each year we are required to provide you information on investment performance, current college cost trends, contact information for your legislators and updates on changes to the Plan. The Report on Higher Education includes this information, in addition to several featured articles. On behalf of the ScholarShare Investment Board, thank you for investing in California’s 529 College Savings Plan. If you have questions regarding your account, or about the Plan in general, call our toll-free number, 1-800-544-5248, or visit scholarshare.com. We welcome your questions and comments. Sincerely,
Arlene Greene Executive Director ScholarShare Investment Board
REPORTON HIGHER EDUCATION
REPORT ON HIGHER EDUCATION
SCHOLARSHARE REPORT ON HIGHER EDUCATION | 2014 | 2
2014
Preparing for college beyond just savings The ScholarShare 529 College Savings Plan was first offered
in 1999 and many of the first account owners are now seeing
the benefit of their savings diligence. Many of their children
have reached college age and are putting their ScholarShare
account savings to use. Last year alone, ScholarShare
processed more than $262 million in Qualified Redemptions in
support of Qualified Higher Education Expenses. That figure is
expected to jump to $300 million by the end of 2014.
For these families, not only did it take a committed savings
strategy to get their children into college, but it also took a
carefully planned academic approach. With approximately 21
million students expected to attend colleges and universities
this fall — 5.7 million more than in the fall of 2000 — families
can expect increased competition for their children vying for
college admissions in coming years.
With so much competition, one thing families can do to make
sure they give their children the best opportunity at getting
into their top-choice colleges is to prepare at an early age.
Below we share the best tips from ScholarShare account
holders with children in college.
TALK ABOUT COLLEGE EARLY ONIt’s never too early to talk with your child about his or her
interests and career aspirations. Having discussions about
their interests provides a good start in thinking about their
future goals and aspirations. Visit CaliforniaColleges.edu,
the official source for college and career planning in California,
for some career building ideas and to learn about various
career options.
BE SELECTIVE ABOUT HIGH SCHOOL COURSESColleges and universities will generally favor slightly lower
grades in a rigorous program, including advanced placement,
international baccalaureate and honors classes, over higher
grades in less challenging courses. Additionally, most higher
education institutions recalculate a student’s grade point
average (GPA) based only on core curriculum courses,
typically including English, mathematics, science, social
studies and foreign language. Therefore, students should opt
for more rigorous courses to demonstrate an ability to excel
at college-level coursework and should focus on performing
particularly well in the core subjects.
PREPARE FOR ADMISSIONS TESTS EARLY ONGetting an early start on preparing for admissions tests can
have a significant impact on your child’s scores. An early
start will allow your child to better prepare and also retake
an exam for which a higher score is desired. Higher scores
are of particular importance as they play a determining role
in the scholarships and merit awards for which your child will
be eligible.
BUILD A RESUME Encourage your child to build a resume by documenting
activities and achievements as early as freshman year.
A resume can be a valuable tool to help your child
showcase his or her record of academic and extracurricular
accomplishments as well as their interests and any other
details that can help them shine beyond what their transcripts
will show.
SUBMIT A STAND-OUT APPLICATIONBeyond the resume and a well-written personal statement,
a creative and original presentation can go a long way in
differentiating your student’s application from those of his or
her peers. Encourage your child to research the admissions
process for each of the colleges they are interested in.
He or she should also reach out to college admissions
counselors and begin building a relationship with them. This
relationship can give students insight into how they can set
themselves apart.
Together, parents and students can take on the challenges
that come with entering college. Whether parents are
working to save for future higher education expenses with
a ScholarShare 529 College Savings Plan or students are
researching admissions processes, more than ever, college is
all about preparation.
“Digest of Education Statistics.” National Center for Education Statistics. Institute of Education Sciences,
Colleges and universities will generally favor slightly lower grades in a rigorous program, including advanced placement, international baccalaureate and honors classes, over higher grades in less challenging courses.
SCHOLARSHARE REPORT ON HIGHER EDUCATION | 2014 | 3
Your 529 plan is part of a bigger strategy to help pay for collegeCalifornia families know all too well that college is expensive.
According to the College Board’s Trends in College Pricing
2013, the average annual cost for full-time undergraduate
students at a four-year in-state public university is
approximately $18,391. For private, nonprofit four-year
institutions, the average cost reaches almost $41,000 per
year. What is not as clear are the various resources available
to help pay for college. While the numbers are certainly
daunting, California families should know that paying for
college doesn’t have to be. Paying for college can come from
different sources, including often overlooked options like
financial aid, grants and student loans.
We connected with Rhonda Johnson, executive director
of financial aid at California State University, East Bay and
senate rules committee appointee to the ScholarShare
Investment Board for her expert insight on how California
families can pay for college. We asked her some of the
pressing questions we hear most from California families.
The information we gathered should bring some relief, as she
debunks myths about 529s and provides valuable information
about financial aid. The great news is that families do not
need to have the total cost of college in their bank or savings
account when their loved one enters college. What you save
should be part of a larger strategy to pay for college.
DOES A 529 ACCOUNT AFFECT A FAMILY’S FINANCIAL AID ELIGIBILITY?A 529 account owned by a parent has little to no impact
on a family’s financial aid eligibility. Parents should not be
reluctant to open or contribute to a 529 account based
on the common misconception that it would make them
ineligible for financial aid. In fact, 529 accounts complement
financial aid offers and a
combination of both — not
one or the other — can be
used to pay for college.
529 accounts are considered
parental assets in the Free
Application for Federal
Student Aid (FAFSA). While
assets are factored in to
determine a family’s Expected
Family Contributions (EFC),
no more than 12% of the
reported assets will be considered. The 12% is calculated
after a portion of assets is excluded from the EFC formula.
Ultimately, the single largest factor contributing to a family’s
EFC is a family’s income, not its savings. If a family earns less
than $50,000 a year, however, it doesn’t consider assets. But
options are available for all income levels.
ARE MIDDLE-INCOME FAMILIES ELIGIBLE FOR FINANCIAL AID? Yes, all families — regardless of family income level — are
eligible for some form of financial aid. Completing the
FAFSA opens the door to many financial aid options that can
help supplement college savings to pay for college, such as
grants, loans and work study funds. Aid is available from the
federal government, state or even the college your child or
loved one attends.
WHAT GRANTS AND SCHOLARSHIPS ARE AVAILABLE THROUGH FINANCIAL AID? While middle-income families may not be eligible for
need-based aid, there are various forms of aid made
possible through FAFSA. Beginning in the 2014-2015
academic year, a new program called the Middle Class
Scholarship (MCS) will offer
students with family incomes
up to $150,000 a scholarship
to attend University of
California (UC) or California
State University (CSU)
campuses.
The program will offer students
with family incomes up to
$100,000 a scholarship of up
to 40 percent of tuition and
fees. Students with families
that earn between $100,001
and $150,000 per year will
be eligible for a reduced
scholarship of no less than 10
percent of tuition and fees.
Cal Grants are another smart
option to help pay for college
expenses for recent high school graduates and community
college transfer students that meet academic, financial and
eligibility requirements. Students can qualify for up to $12,192
a year to help pay for college expenses at any qualifying
California institution and the funds do not need to be repaid.
ARE STUDENT LOANS A VIABLE OPTION TO HELP PAY FOR COLLEGE? California families may have mixed feelings about student
loans but they are not as bad as you think; here’s why.
Federal student loans provide an effective and accessible
way for families to supplement their 529 College Savings
Plan, scholarships or any other aid to help pay for college.
Student loans are deferrable while the student is in school,
and the student won’t enter repayment until the student
graduates or leaves school for at least six months.
CONTINUED ON NEXT PAGE
FACTThe single largest factor contributing to a family’s Expected Family Contributions (EFC) is a family’s income, not its savings.
$18,391The average annual cost for full-time undergraduate students at a four-year in-state public university.
$41,000The average annual cost for full-time undergraduate students at a private, nonprofit four-year institution.
SCHOLARSHARE REPORT ON HIGHER EDUCATION | 2014 | 4
CONTINUED FROM PREVIOUS PAGE
In addition, these federally backed student loans come with
student-friendly repayment options, and can sometimes
qualify for consolidation, cancellation or forgiveness. Any
student, including a first-time freshman, can apply for a
student loan without a credit check.
California families should find relief in knowing that many
options and resources exist to help pay for college. There isn’t
a one-size-fits-all approach. By planning ahead, families can
develop a comprehensive strategy to utilize various financial
resources to help achieve their
college savings goals.
It is our mission to continue to
educate California families on
the available options — which
include the ScholarShare 529
College Savings Plan — to help
pay for higher education.
For other resources, check out CaliforniaColleges.edu,
studentaid.ed.gov, or visit a local college financial aid office.
Published Tuition and Fee and Room and Board Charges, 2013-14, Table 1A: Average Published Charges for Full-Time Undergraduates by Type and Control of Institution, 2013-14 (Enrollment-Weighted), Trends in College Pricing 2013, The College Board, Annual Survey of Colleges.
FAFSA Deadlines
FEDERAL DEADLINE
Online applications must be submitted by midnight
Central Time, June 30, 2015.
Any corrections or updates must be submitted by
midnight Central Time, September 19, 2015.Source: Federal Student Aid *Colleges may adhere to different deadlines
Cal Grant Award Deadline
To be considered for a 2015-16 Cal Grant award, you must
have completed both of these application requirements
by March 2, 2015*:
1. Submitted a 2015-16 Free Application for Federal
Student Aid (FAFSA) or a 2015-16 California Dream Act
Application.
2. Ensured that a certified Grade Point Average (GPA)
was submitted to the California Student Aid Commis-
sion (Commission).
*2015-16 Cal Grant applications are accepted through
Monday, March 2, 2015.Source: California Student Aid Commission
COLLEGE EDUCATIONTHEValue OF A
COLLEGE EDUCATION
EARNINGSOver a full-time working life,
the earnings of a college graduate are 65% higher than those
of a non-graduate.
BENEFITSThose with higher levels of
education are more likely to be covered by employer-provided
health insurance.
FINANCIALSTABILITYThe poverty rate for
college graduates is usually about one-third the
rate of non-graduates.
EMPLOYMENTThe unemployment rate for college graduates is
usually about half that of non-graduates.
RETIREMENTCollege-educated workers are more likely than others to be offered pension plans
by their employers.
Source: CollegeBoard.org
FACTA 529 account does not make your child ineligible for financial aid.
SCHOLARSHARE REPORT ON HIGHER EDUCATION | 2014 | 5
Historical investment performance (As of August 31, 2014)
INVESTMENT PORTFOLIOS1INCEPTION
DATEYEAR-TO-
DATE 1 YEAR 3 YEAR 5 YEARSINCE
INCEPTION
ACTIVE AGE-BASED INVESTMENT PORTFOLIO OPTION2,4
Age Band 0-4 11/4/11 6.85% 19.89% – – 15.79%
Blended Index3 – 7.92% 19.04% – – 14.68%
Age Band 5-8 11/4/11 6.61% 18.39% – – 14.56%
Blended Index3 – 7.56% 17.31% – – 13.17%
Age Band 9-10 11/4/11 6.42% 16.90% – – 13.36%
Blended Index3 – 7.19% 15.58% – – 11.66%
Age Band 11-12 11/4/11 6.31% 15.46% – – 12.14%
Blended Index3 – 6.82% 13.88% – – 10.16%
Age Band 13-14 11/4/11 6.10% 13.86% – – 10.89%
Blended Index3 – 6.44% 12.18% – – 8.66%
Age Band 15 11/4/11 5.60% 11.86% – – 9.22%
Blended Index3 – 5.56% 9.92% – – 6.89%
Age Band 16 11/4/11 5.05% 10.45% – – 8.13%
Blended Index3 – 4.87% 8.51% – – 5.87%
Age Band 17 11/4/11 4.16% 8.39% – – 6.70%
Blended Index3 – 3.94% 6.83% – – 4.72%
Age Band 18 & Over 11/4/11 3.30% 6.54% – – 5.30%
Blended Index3 – 3.01% 5.16% – – 3.57%
PASSIVE AGE-BASED INVESTMENT PORTFOLIO OPTION2,4
Age Band 0-4 11/4/11 7.51% 19.16% – – 14.72%
Blended Index3 – 7.84% 19.10% – – 14.87%
Age Band 5-8 11/4/11 7.32% 17.62% – – 13.27%
Blended Index3 – 7.52% 17.43% – – 13.37%
Age Band 9-10 11/4/11 6.95% 16.00% – – 11.79%
Blended Index3 – 7.21% 15.78% – – 11.88%
Age Band 11-12 11/4/11 6.56% 14.14% – – 10.21%
Blended Index3 – 6.89% 14.14% – – 10.40%
Age Band 13-14 11/4/11 6.38% 12.71% – – 8.77%
Blended Index3 – 6.56% 12.51% – – 8.92%
Age Band 15 11/4/11 5.65% 10.65% – – 7.17%
Blended Index3 – 5.70% 10.25% – – 7.13%
Age Band 16 11/4/11 5.05% 9.31% – – 6.23%
Blended Index3 – 5.00% 8.81% – – 6.09%
Age Band 17 11/4/11 4.24% 7.64% – – 5.23%
Blended Index3 – 4.05% 7.07% – – 4.89%
Age Band 18 & Over 11/4/11 3.40% 6.24% – – 4.23%
Blended Index3 – 3.10% 5.35% – – 3.71%
AVERAGE ANNUAL TOTAL RETURN
SCHOLARSHARE REPORT ON HIGHER EDUCATION | 2014 | 6
Index International Equity Investment Portfolio 11/4/11 3.84% 17.08% – – 12.02%
Blended Index3 – 4.17% 17.20% – – 12.02%
SINGLE-FUND INVESTMENT PORTFOLIOS4
Social Choice Investment Portfolio 11/4/11 9.47% 24.35% – – 19.78%
Blended Index3 – 9.23% 24.74% – – 20.81%
Index Bond Investment Portfolio 11/4/11 4.61% 5.44% – – 2.29%
Blended Index3 – 4.81% 5.66% – – 2.66%
Index U.S. Large Cap Equity Investment Portfolio 11/4/11 9.79% 25.04% – – 20.49%
Blended Index3 – 9.89% 25.25% – – 20.71%
Index U.S. Equity Investment Portfolio 11/4/11 9.20% 24.60% – – 20.59%
Blended Index3 – 9.23% 24.74% – – 20.81%
Principal Plus Interest Investment Portfolio5 11/4/11 0.77% 1.36% – – 1.43%
Blended Index3 0.03% 0.04% – – 0.05% The performance data quoted represents past performance and is the net of all fees and expenses, including the estimated expense ratio of the underlying mutual funds, State Administrative Fee and the Program Manager Fee. Past performance is not a guarantee of future results. Your returns and the principal value of your Account will fluctuate so your investment may be worth more or less than the original value when you withdraw your money. Current performance may be lower or higher than the performance quoted above. Updated performance data is available at scholarshare.com 1 All performance figures in the table, with the exception of the performance figures less than one year, represent the average annual compound rate of total return. All figures less than one year represent cumula-
tive, non-annualized returns.2 Beneficiaries are moved from one Age Band to the next Age Band on the first “rolling date” following their fifth, ninth, eleventh, thirteenth, fifteenth, sixteenth, seventeenth and eighteenth birthdays. The “rolling
dates” are March 20, June 20, September 20 and December 20 (or the first business day thereafter).3 The Blended Indexes are customized benchmarks that combine the fund benchmarks of each underlying mutual fund held in an investment portfolio (other than the Principal Plus Interest Investment Portfolio)
according to the investment portfolio’s asset allocation during the relevant time period. The Blended Indexes are used to compare the performance of the corresponding investment portfolio. They are unmanaged and do not reflect the deduction of any fees or expenses.
4 These investment portfolios have limited operating histories, so the returns cited above may not be a good indication of how they may perform over a longer time period.5 The Principal Plus Interest Investment Portfolio seeks to preserve capital and provide a stable return. The assets in the portfolio are allocated to a funding agreement issued by TIAA-CREF Life to the Board, which is
the policyholder under the agreement. This funding agreement provides for a return of principal plus a guaranteed rate of interest and allows for the possibility that additional interest may be credited as declared periodically by TIAA-CREF Life. The interest rate guarantee is made to the Board only, and not to account owners or beneficiaries.
AVERAGE ANNUAL TOTAL RETURN
SCHOLARSHARE REPORT ON HIGHER EDUCATION | 2014 | 7
Sharing the latestSCHOLARSHARE SPEAKSScholarShare Speaks, our idea
sharing series, is designed
to create discussion about
important topics in education,
health and parenting.
Visit scholarsharespeaks.com
for more information and
to register for these events
throughout the year.
YOUR STATE REPRESENTATIVEThe ScholarShare 529 College Savings Plan provides all
account owners with contact information for their state
legislators annually, as required by law. If you would like to
contact your state representative about your ScholarShare
529 College Savings Plan account, visit www.leginfo.ca.gov/
yourleg.html to find the appropriate address and phone
number, or contact our office at (916) 651-6380.
SHARE SOCIALLYBe sure to follow us on Twitter
@scholarshare529 and like us on Facebook at
facebook.com/scholarshare529 for college savings
tips, information on our latest events and other useful
college resources.
CONTACT USVisit us online at scholarshare.com or call 800-544-5248.
TAX FREEState of California
$500.00
jane s. doePO Box 9875newcity, CA 99000
George T. Jackson
BRIGHTER FUTURE
Transform YOUR TAX REFUND INTO A
BRIGHTER FUTUREYour refund can go so much further if you invest it in education.
So, before you get tempted by some short-term impulse buy, roll your California tax refund into your 529 fund and get a big (educational) bang for your buck.
Saving now makes for a brighter future later.
Undergraduate resident mandatory fee comparisons
CA COMMUNITY COLLEGES CSU SYSTEM UC SYSTEMCA INDEPENDENT COLLEGES (BASED ON MEDIAN COSTS)
2013-14 $1,104* $6,633 $13,200 $32,100
2014-15 $1,104* $6,698 $13,300 $32,100
Annual Change $0 $65 $100 $0
*Estimate is for 12 units/semester.Source: CaliforniaColleges.edu Web site: https://secure.californiacolleges.edu/Financial_Aid_Planning/_default.aspxNote: Costs here are estimates for the 2014-2015 academic year (for in-state residents) and are not a guarantee of fees or your actual costs for other expenses. The mandatory fees in the chart above are only a portion of the costs considered “qualified higher education expenses” under Internal Revenue Code Section 529 (which governs plans like the ScholarShare Plan). For example, additional costs, such as required books and supplies, and certain room and board costs, are also qualified higher education expenses.
EASY TO SHARE.
MAKES IT
Share a brighter future with the child in your life.
Do it easily — by eGifting with ScholarShare, California’s 529
college savings plan. You can open a new account or contribute
to an existing one; the reasons are as simple as 1, 2, 3:
• Tax-advantaged contributions
• Account owner retains control of the assets
• Age-based portfolio options
Go to scholarshare.com to share your eGift today.
Consider the investment objectives, risks, charges and expenses before investing in the ScholarShare College Savings Plan. Visit ScholarShare.com for a Plan Disclosure Booklet containing this and other information. Read it carefully. Investments in the Plan are neither insured nor guaranteed, and there is a risk of investment loss. TIAA-CREF Tuition Financing, Inc., Program Manager. The ScholarShare 529 Twitter and Facebook pages are managed by the State of California.C12797
