featured graphic for California State Treasurer Fiona Ma after COVID-19

Bill to expand use of 529 College Savings Plans to cover apprenticeship costs and pay student loan debt signed by governor

State Treasurer Fiona Ma extended her thanks and appreciation to Governor Gavin Newsom for signing Assembly Bill 340 (Ward) (AB 340) into law. This important piece of legislation sponsored by Treasurer Ma will modernize how funds in a 529 college savings account can be utilized to help families pay for future higher education expenses.

Specifically, the 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 $10,000 in student loan debt per beneficiary and each of the beneficiary’s siblings. 529 account holders in California can now utilize these funds for these purposes without fear of having their earnings taxed and penalized by the state.

“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,” stated State Treasurer Ma. “AB 340 now gives California families the flexibility to utilize their funds in a 529 college savings account to pay for apprenticeship program-related expenses or make payments on student loans, which can be critical during periods of economic uncertainly like we’re experiencing today. This is a victory for many of the workers who are or will be seeking additional training to advance their careers in one of California’s many quality apprenticeship programs.”

“Ensuring Californian’s have the tools and flexibility needed to access higher education is a top priority of the State Legislature,” said Assemblymember Chris Ward. “With Governor Newsom’s approval of AB 340, Californians can now utilize their ScholarShare 529 plans to pay down expenses related to eligible apprenticeship programs and qualified student loan debt. This is a win for so many across our state that have been unable to attain their post-secondary educational needs due to financial insecurities exacerbated by the ongoing pandemic.”

Presently, national student loan debt has reached $1.6 trillion. California is home to 3.8 million of the nation’s 45 million borrowers, the highest number of any state. The average Class of 2019 college graduate in California owes about $21,485 in student loans. Given the impacts of the COVID-19 pandemic, AB 340 gives families greater flexibility with their 529 savings by ensuring their child has access to whichever type of qualified higher education best fits their unique professional aspirations.

To learn more about ScholarShare 529, visit https://www.ScholarShare529.com.

This article was released by the California Treasurer’s Office.