Intersections: A monthly go-to for reliable facts and analysis about California's debt, investments and economy

ScholarShare Launches First-in-Nation College Gift Cards at Toys "R" Us Stores

By Treasurer John Chiang

Past generations of Americans viewed job security, owning a home and going to college as the fruits of living in America and, particularly, the Golden State.

But these days uncertainty has replaced certainty. People feel financially dislocated. There is a creeping sense of despair in many communities.

Last month, millions of Americans who feel that the dream passed them by cast votes for change. They voiced concerns about losing jobs to foreign competitors, stagnating wages, and crippling loads of student loan debt. They vented frustration over a lack of concern for the insecurity that has gripped middle class and blue-collar workers.

We need to provide people with hope that the American Dream still exists. It starts with creating a pathway to higher education.

One significant way to do that is by encouraging parents to start early and put aside money for their children�s college education by participating in the ScholarShare 529 Savings Plan.

Starting and growing a ScholarShare account (administered by an agency in the Treasurer�s Office) is a concrete step to helping the next generation emerge in a stronger position to bridge the wealth gap and address some of today�s financial insecurities.

A higher education can help any Californian live a healthier, happier, and more rewarding life.

And saving now is easier than ever, thanks to a new product being launched by ScholarShare � college savings gift cards. Families can purchase a Gift of College ScholarShare gift card at about 100 Toys "R" Us and Babies "R" Us stores throughout California.

This innovative card is being made available just in time for the holidays. We expect them to be popular stocking stuffers since gift cards are used by nearly 93 percent of consumers.

We are aiming, obviously, to make opening a college savings account more consumer-friendly. The gift of college fits with any occasion, including holidays, birthdays, graduations and baby showers.

Gift cards are more than a sales promotion. There is no more time-tested solution to poverty, crime, or income inequality than to make college education an affordable possibility for every child who seeks one.

Helping young people pay for college is an investment that pays big dividends. The National Center for Educational Statistics reported on this in 2014. It found that among young adults ages 25�34 who work full time, year round, higher educational attainment was associated with higher median earnings; this pattern was consistent from 2000 through 2014.

For example, in 2014 the median earnings of young adults with a bachelor's degree ($49,900) were 66 percent higher than the median earnings of young adults who only completed high school ($30,000).

The median earnings of young adult high school completers were 20 percent higher than the median earnings of those without a high school credential ($25,000).

In addition, median earnings of young adults with a master's or higher degree were $59,100 in 2014, some 18 percent higher than the median earnings of young adults with a bachelor's degree. This pattern of higher earnings associated with higher levels of educational attainment held for both male and female young adults as well as for White, Black, Hispanic, and Asian young adults.

Faced with skyrocketing tuition, we must empower Californians to save, invest, and plan for their children�s futures.

People are becoming increasingly cognizant of the fact that college tuition is constantly climbing and that students are graduating with enormous student loan debt. Well, a ScholarShare account can help ease those pressures.

Often, a lack of money for college becomes a barrier, preventing people from obtaining a college degree.

That�s understandable, especially since tuition rates are rising at on average, two to three times the rate of general inflation. Nationally, tuition and fees at public four- and two-year institutions have increased 40 percent and 29 percent, respectively, over the past 10 years. In California, the increases in tuition and fees have been even more alarming. From 2005-06 through 2014-15, tuition and fees at the University of California, California State University, and California Community Colleges have jumped by 114 percent, 117 percent, and 130 percent, respectively.

There is a significant amount of research over the past several years establishing a strong correlation between child savings accounts and greater educational opportunity. One study found that even students with a college savings of $500 or less, are three times more likely to enroll in college and four times more likely to graduate than those students without a college savings account. Another study found that children with college savings accounts in their name are nearly seven times more likely to attend college than children without an account.

This is why I am so excited about this partnership. Having gift cards in Toys "R" Us and Babies "R" Us stores makes it easier for all families to open and contribute to a ScholarShare account and thus create a pathway for affording a college degree without having to over-rely on burdensome student loans.

Treasurer's ScholarShare Launches First-in-the-Nation College Savings Gift Cards from State Treasurer's Office on Vimeo.