Report on higher education 2021

Report On Higher Education 2021

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California
Education

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We love our children. And, we want the best for them.

These simple facts are why we work to provide every opportunity for our kids to succeed—the chance to improve themselves and their situation in life. For many, that hope includes access to higher education. But if we learned anything last year, it’s that the path to college is not always straightforward.

In this day and age, perhaps the most difficult days for some Californians, I remind you that the people at ScholarShare 529 are devoted to making a college education possible for your family, for every family. This year’s Report on Higher Education highlights how we did that in 2021.

We made progress. As of September 2021, 215,000 Golden State residents held ScholarShare 529 accounts, with a total value of $12.46 billion assets under management. That’s a 20% increase over the previous year in money earmarked for college expenses.

Thank you for taking time to read the Report on Higher Education. This issue demonstrates more than ever our commitment to helping our children achieve the very best they can.

Julio Martinez Signature

Julio Martinez
Executive Director
ScholarShare Investment Board

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Challenges &
Opportunities

Higher education has been pushed to respond to a variety of complexities. Here are a few 2021 challenges and opportunities.

COVID-19 Delta Variant

With the transmission of COVID-19 slowing in the spring and millions of Americans getting vaccinated every week, colleges anticipated a near-normal fall semester. But that prospect changed, and not for the better. The 60% more transmissible Delta variant1 paired with relatively low vaccination rates in some states, pushed new national cases higher than they had been in months2 and fueled debate about the legality of mandating vaccinations for college students, faculty and staff.3

Diversity & Inclusion

The unrest that followed George Floyd’s murder May 25, 2020 underscored the persistent racial inequities in America and pressured higher education to consider systematic inequities in its policies, procedures and practices.4 No facet of education was off-limits—from removing barriers deemed discriminatory by many like the SAT and ACT entrance exams at The University of California5 to the controversy over teaching critical race theory (CRT),6 to unequal access to broadband during the shift to online learning.7 In short, the triple threat of COVID-19, systemic racism, and racial inequities begged for more equitable outcomes from the American education system for underrepresented populations.

Mental Health

Gen Z do not recall a time before the internet. And the prevalence of cell phones—including 24/7 access to social media and news—among this generation affects every area of their life. Considering the effects of the constant influx of information, plus the effects of the ongoing pandemic, it’s no wonder a whopping 91% of Gen Z said they experienced physical or emotional symptoms due to stress and mental illness in the past year.8 Consequently, colleges and universities identify mental health as one of their highest risks facing students.9 Addressing mental health conditions is no easy challenge for educators—pain points include financial constraints and resource availability.

Mental Health

Gen Z do not recall a time before the internet. And the prevalence of cell phones—including 24/7 access to social media and news—among this generation affects every area of their life. Considering the effects of the constant influx of information, plus the effects of the ongoing pandemic, it’s no wonder a whopping 91% of Gen Z said they experienced physical or emotional symptoms due to stress and mental illness in the past year.8 Consequently, colleges and universities identify mental health as one of their highest risks facing students.9 Addressing mental health conditions is no easy challenge for educators—pain points include financial constraints and resource availability.

Overall college enrollment dropped 1.8% in 2020.
Declining Enrollments

America is the top destination for foreign students studying abroad, topping one million for five straight years.10 So, when overall enrollment dropped 1.8% in 2020 for the first decrease in 15 years, it was a red flag. Then came COVID-19, with limited and banned travel. And the number of international students studying in the U.S. fell 16% for the 2020-21 academic year, largely due to a 43% decrease in new enrollments.11 Looking forward, educators are asking "Is COVID-19 causing an enrollment drop or is something deeper at play?"

Overall college enrollment dropped 1.8% in 2020.
U.S. Student Debt facts; 45 million borrowers, $37,693 average per person, and 1.7 trillion overall.
Student Debt

There are 45 million borrowers collectively owing $1.7 trillion in student loan debt in the U.S. with an average of $37,693 per person.12 That makes student loan debt the second highest consumer debt category—second only to mortgage debt. Because COVID-19 hindered students’ ability to pay back loans, the government froze federal student loan payments in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).13 After several extensions, President Biden announced that the relief period will end January 31, 2022.14 Now, Congress and the White House are battling over student loan cancellation. Biden’s administration continues to review the legality of broad student loan cancellation.15

Student Debt

There are 45 million borrowers collectively owing $1.7 trillion in student loan debt in the U.S. with an average of $37,693 per person.12 That makes student loan debt the second highest consumer debt category—second only to mortgage debt. Because COVID-19 hindered students’ ability to pay back loans, the government froze federal student loan payments in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).13 After several extensions, President Biden announced that the relief period will end January 31, 2022.14 Now, Congress and the White House are battling over student loan cancellation. Biden’s administration continues to review the legality of broad student loan cancellation.15

U.S. Student Debt facts; 45 million borrowers, $37,693 average per person, and 1.7 trillion overall.
Cost of College

The average cost of college in the U.S. is $35,720 per student per year. The cost has tripled in 20 years, with an annual growth rate of 6.8%. The average in-state student attending a public four-year institution spends $25,615 for one academic year. The average traditional private university student spends a total of $53,949 per academic year, $37,200 of it on tuition and fees. Considering student loan interest, the ultimate cost of a bachelor’s degree may exceed $400,000.16

Cost of college facts: $25,615 average per year for public school and $53,949 average per year for private.
California Tuition

There are 779 colleges in California—193 public and 571 private schools. The average tuition and fees of California colleges are $3,282 for residents and $12,517 for students from other states.17 The good news for Golden State residents is that the cost of college remains consistently low.

Undergraduate Resident Tuition Costs

Undergraduate resident tuition costs for CCC ($1,104 per year), CSU ($5,742 per year), and UC ($12,570 per year) remain the same as last year.

These tuition costs represent the estimated costs of attending one year of college as a full-time student at each respective institution. These estimates do not include the cost of additional campus-based fees. Your total costs will vary depending on your personal expenses and the campus you attend.

1Nature Journal, June 22, 2021 2New York Times, August 11, 2021 3Chronicle of Higher Education, August 9, 2021 4American Council on Education Supplement, 2020 5College Countdown, June 21, 2021 6Education Week, May 18, 2021 7Association of Common Wealth Universities, 2021 8TimelyMD, July 23, 2021 9PBS News Hour, January 19, 2021 10Open Doors, 2020 11Institute of International Education, 2020 12Forbes, February 20, 2021 13National Consumer Law Center, March 28, 2020 14Department of Education, August 10, 2021 15Forbes, August 2021 16Think Impact, 2021 17College Tuition Compare, 2021 18CCC, 2021 19Calstate.edu, 2021 20UniversityofCalifornia.edu, 2021



ACCESS HIGHER
EDUCATION

As California’s official college savings plan, ScholarShare 529 champions the value of higher education. If we’re going to equip our kids to create a better world, access to education has to be the starting point. Here are a few things we’re doing toward that aim.

Matching Grant

Nothing has a bigger impact on the professional success and upward economic mobility of young people than higher education. But, for many families, the dream of sending their children to a community college, trade school, or university has climbed beyond reach as costs and student loan debt skyrocket.

That’s why ScholarShare 529 is offering eligible families a matching grant to help kickstart the college planning process. Studies have shown that even children with college savings of less than $500 are three times more likely to enroll in higher education, and four times more likely to graduate, than those without a college savings account.21

ScholarShare 529’s Matching Grant Program helps you save for your child’s future higher education costs. Let ScholarShare 529 help you get started with a dollar-for-dollar matching grant of up to $200 when you open an account plus a $25 bonus for setting up recurring contributions. Apply for the matching grant now.

Even children with college savings of less than $500 are three times more likely to enroll in higher education.

Workplace Savings Program

More than 1,000 California employers, including CalPERS and California State University, are giving their workers the opportunity to save for college using ScholarShare 529’s Workplace Savings Program. Employees of participating employers can save for college through a payroll direct deposit process, while gaining access to useful college savings tools and educational resources.

Among the 1,000 employers offering the program are 180 state colleges and universities, state agencies, cities and counties. The Program is free, easy, and a benefit that helps employers stay competitive, while improving the lives of employees and their families.

The Workplace Savings Program is easy to set up, manage, and maintain, and requires no reporting or contracts. Read more, attend a webinar or request a consultant to speak with your employees.

Breakdown by age of ScholarShare 529 account beneficiaries: age 0-3 = 35%, age 4-7 = 16%, age 8-11 = 17%, age 12-15 = 20%, age 16+ = 35%.
College Countdown

With over 125,000 ScholarShare 529 accounts for students ages 16+ (as of 6/30/21) and on the cusp of transitioning to college, ScholarShare 529 launched a web resource offering just-in-time information about this exciting stage in a student’s life. Covering topics like affording college, using your 529, college admissions, student life, academic success, and parenting, College Countdown works with industry professionals from across the country to equip parents of high school juniors and seniors for this exciting season in life. Go to the College Countdown site.

College Countdown

With over 125,000 ScholarShare 529 accounts for students ages 16+ (as of 6/30/21) and on the cusp of transitioning to college, ScholarShare 529 launched a web resource offering just-in-time information about this exciting stage in a student’s life. Covering topics like affording college, using your 529, college admissions, student life, academic success, and parenting, College Countdown works with industry professionals from across the country to equip parents of high school juniors and seniors for this exciting season in life. Go to the College Countdown site.

Breakdown by age of ScholarShare 529 account beneficiaries: age 0-3 = 35%, age 4-7 = 16%, age 8-11 = 17%, age 12-15 = 20%, age 16+ = 35%.
Cost of College
529 Upgrades

The ScholarShare Investment Board is proud to share three Plan enhancements for 2022. Details will be available later this year.

1. Lower-Cost Portfolios

We will enact marginal allocations within the Active portfolio lineup to lower portfolio-level investment fees while maintaining exposure to and management by the active funds that continue to work well. Participant portfolios will enjoy the benefit of lower fees but still serve the purpose of seeking to achieve excess returns.

Lower fees can mean more money for college savings.
2. Environmental, Social and Governance (ESG)

We will launch an industry-first ESG Enrollment Year Portfolio lineup, as well as feature new individual fund portfolios for international equity and fixed income ESG investing.

That means you can invest and help save the earth.
3. Streamlined Options

We will merge select portfolios to make each investment option more distinct while still providing choice for diversified portfolios across the risk spectrum. This also helps scale the investment menu as we add the new ESG section with a new glide path.

Focused investment options that make sense.


CALIFORNIA
COLLEGEBOUND KIDS

The California Kids Investment and Development Savings Program (CalKIDS), the nation’s largest Children’s Savings Account (CSA) program, aims to launch in 2022 and jump-start college savings for over 4 million children statewide.

CalKIDS logo, the first step toward college.

California wants to help families rely less on student loan debt when they’re ready to send their kids to college.

Enacted in the 2019–20 State Budget, CalKIDS was designed to expand access to higher education through savings with tools like ScholarShare 529, California’s official tax-advantaged college savings plan.22 CalKIDS is administered by the ScholarShare Investment Board, an agency of the State of California, and was initially established to automatically provide newborns in California with college savings accounts, including seed deposits and other potential financial rewards. In 2021, however, CalKIDS was expanded significantly to include 3.7 million low-income public-school students enrolled in grades one through 12 who qualify for free or reduced lunch, are homeless or are in foster care.

The investments provided in CalKIDS accounts can be a steppingstone to building a new savings behavior for families and serve as a tangible demonstration of the state’s commitment to supporting children in reaching the goal of higher education. Read about the effectiveness of CSAs.

Eligible children can receive a CalKIDS account. Families can link their ScholarShare 529 account, and money can be used for qualified higher education expenses.

Each CalKIDS account will be seeded with a minimum deposit held in the ScholarShare 529 college savings plan or another investment mechanism in which money can potentially grow and eventually be used for a range of postsecondary expenses.

Sign up for CalKIDS updates on the development and upcoming launch of the program, including important information about eligibility, terms and conditions, and anticipated launch date.

22California Legislative Information, 2021

Ugift

Ugift is our easy-to-use service that makes it simple for friends and family to contribute to your college savings plan. Invite friends and family to contribute using email, social media like Facebook and Twitter, through a unique gift code dedicated to your account, or print certificates for any occasion. Anyone can contribute electronically or by mail.

Learn more about Ugift.
This photo depicts a grandfather with his grandson.
Your State Representative

The 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 account, visit findyourrep.legislature.ca.gov to find the appropriate address and phone number, or contact our office at
916-651-6380.

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