An estimated 154,000 students will learn in the coming weeks whether they've been awarded new scholarships at UC and California state universities. This new program targets families whose financial needs have largely been ignored in the past and the good news is these new middle class scholarships will get even bigger in the coming years.
Marian Kicklighter's oldest child is just one year away from starting college. It's a moment she's been saving for since her son Ian was born. "We've been putting money not only in 529 plans, but also grandparents and friends have been giving us money and savings bonds and things like that."
In all, she's set aside $45,000 for Ian's education. That's enough to pay the $33, 000 it will cost Ian for one year's worth of tuition, room and board at a UC campus. "I know that as a parent, looking at college, it's not enough."
A new program being implemented this coming school year at California's public universities will offer scholarships to students from middle class families.
Rachelle Feldman is assistant vice chancellor of financial aid at UC Berkeley. "The students from slightly higher, middle income families have been getting a little bit of a squeeze."
During phase one of the program, the scholarship will cover about $1,100 or 14 percent of a student's tuition. By the 2017-2018 school year, scholarships worth up to 40 percent of tuition will be offered. That's great news for students.
"It's very significant. Hopefully I think I will be eligible, hopefully. It's going to provide me piece of mind," incoming UC Berkeley student David Barba said.
"I feel like the financial aid packages becoming a lot better for a lot of the students, making college affordable for everybody," one student said.
Kicklighter is considering hiring a wealth management professional.
"I think that the mistakes people make when they're planning for college is not saving at an early enough age, not saving enough, could be not saving in the right types of accounts," Trilogy Financial services spokesperson Aaron Johnson said.
Johnson warns if money saved in a 529 plan isn't used for college, there's a huge tax penalty. Also if the 529 is set up under the Uniform Gifts to Minor Act, that money technically belongs to a child when they turn 18 and legally a teen can spend that money on anything he or she wants. The good news is if not all the money is used, the parents can declare another beneficiary such as a younger sibling or grandchild.
"The discussion I have with people is, do you want to have a certain dollar amount? If you want to have $50,000 when the child turns 18, OK well we need to save $200 a month to get to that $50,000," Johnson said.
Families with incomes up to $150,000 are eligible. It's open to all undergraduate students at the California public university system, including those students under the California Dream Act.
Tuition relief to be offered for middle class students