As an HR professional, you are probably always on the lookout for new, competitive benefits to help retain your employees and attract the best talent.
With college costs exponentially rising, today’s parents are looking for the best ways to save for future higher education expenses. To that end there’s a growing trend in HR that addresses both of these important goals:
Employers are now increasingly offering college savings tools to employees.
The 4th quarter of the year is the perfect time for HR professionals to consider adding a ScholarShare 529 college savings option to their benefits packages. Here are six reasons to consider upon offering a college savings option as part of your benefits suite.
- College costs are skyrocketing. According to the College Board, a typical private, nonprofit college charged $46,950 in 2017 for tuition, fees, and room and board, and those costs are only predicted to increase further in the coming years. Over the past decade, tuition rates at the University of California, California State University and California Community College have increased by 77 percent, 88 percent and 130 percent, respectively. As a result, student loan debt has now reached $1.5 trillion nationally, up from $676 billion in 2008.
- Parents are struggling to put their children through college. Eighty-eight percent of Californians saving for a child’s college education say it is one of the most important things they can do as a parent, yet 43 percent say they are nervous about meeting that goal, according to the ScholarShare 529 Parents Saving for College Study, 2017. According to Sallie Mae’s 2018 “How America Saves for College” report, fewer than six in 10 parents have actually started saving for their children’s higher education – and they have only saved about $18,000.
- 529 college savings plans can be valuable tools for offsetting the cost of higher education. These plans can offer families a diverse set of investment options and tax benefits that make it potentially easier for parents to meet their college savings goals. The earnings from 529 plans are free from state and federal income tax when used for qualifying higher education expenses, including tuition, room and board, computers, books, and other required supplies at most trade schools, colleges, and universities nationwide and abroad.
- Offering a plan is free and easy for you and potentially worth thousands to your employees. Setting up a 529 college savings plan for employees to participate is easy and free for employers to manage. By simply setting up a payroll slot, employers can offer a direct deposit workplace savings program that makes saving for college easy for employees. Even better, these plans are potentially worth thousands of dollars to employees through 100 percent tax-free growth, which can potentially translate to 25 percent more money for higher education.
- Top performance and low fees. While 529 college savings plans offer tax benefits, they aren’t all created equal. Be sure to closely consider cost and plan performance, among other factors, before offering a plan to your employees. When it comes to performance, ScholarShare 529 is ranked number one in the nation among all direct-sold 529 plans, based on a three-year and five-year investment period ending June 30, 2018, according to Savingforcollege.com’s Q2 2018 529 plan rankings. In addition, the plan’s investment expenses are about half of the national average, according to Strategic Insight 529 Plan Fee Analysis. This means that along with the tax benefits, your employees keep more of their investment returns than they would with more expensive plans.
- A growing number of California employers are offering the ScholarShare plan. Nearly 1,000 California employers – including 11 of the state’s largest employers and eight of the 10 best companies to work for in the U.S. – already offer the state’s ScholarShare 529 college savings plans to their employees. Major healthcare providers along with some of the state’s tech giants and startups are among the growing list of employers offering the plan. As of June 30, 2018, $8.6 billion in assets across nearly 310,000 accounts is invested in the ScholarShare 529 plan. In addition, the ScholarShare 529 team provides in-depth support for HR professionals, including a comprehensive suite of materials designed to educate employees and help make understanding 529 college savings plans and enrolling in the program simple and painless.
It’s not often that HR professionals can offer employees an entirely new program with significant long-term benefits. A 529 workplace savings program is one such benefit, and California’s ScholarShare 529 is a valuable plan to consider during National College Savings Month, and beyond. Visit www.ScholarShare529.com/employer to learn more.
ScolarShare529 is a NCHRA Platinum Sponsor
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