It could get easier for California parents to save for college.
A Senate fiscal panel has approved a plan authored by state Sen. Jenny Oropeza that would help parents save for their children's college education by allowing them to directly deposit tax refunds into qualified tuition-savings accounts.
State Treasurer Bill Lockyer sponsored Senate Bill 323. Oropeza, a Long Beach Democrat, introduced it in the state's upper house.
"With the increasing cost of higher education, it is more important than ever to provide families with the financial tools to save for college," Oropeza said after the Senate Revenue and Taxation Committee approved the bill. "Distributions from these accounts are tax-free, provided the funds are used for higher-education expenses."
Current law allows any tax refunds to be deposited directly into a taxpayer's checking or savings account.
SB 323 would allow for a similar direct deposit into a qualified tuition program, commonly known as a 529 plan. States govern the investment programs.
California processes nearly 4 million direct-deposit refunds into checking and savings accounts each year. Oropeza would like to see more of those deposits in college-savings plans.
The bill will next be heard by the Senate Appropriations Committee. No date has yet been set.
