In case you didn’t know it, California maintains a tax-favored “529” savings program for college tuition (and related college expenses) that works something like an IRA. It can be used for any qualified institution nationwide, not just UC.
Details are at https://www.scholarshare.com/home.shtml
Contributions and Any Earnings Used to Pay for Qualified Higher Education Expenses are Federal and California Income Tax-free.
Contributions to ScholarShare may reduce the taxable value of your estate. For example, contributions to the Plan, together with all other gifts from the account owner to the beneficiary, may qualify for an annual federal gift tax exclusion of $13,000 per donor ($26,000 for married contributors), per beneficiary. If an account owner’s contribution to a ScholarShare account for a beneficiary in a single year exceeds $13,000 ($26,000 for married contributors), the account owner may elect to treat up to $65,000 of the contributions, or $130,000 for joint filers, as having been made over a period of up to five years for federal gift tax exclusion. Consult your tax advisor.
Parents, grandparents, relatives and friends who are U.S. citizens or resident aliens and at least 18 years of age may open an account and contribute to ScholarShare on behalf of a beneficiary*. California state residency is not required. However, investors residing outside of California should consider their own state’s plan first as it may have tax advantages that are only available through that state’s plan.
Whether your beneficiary decides to go to a private or public college or university, in-state or out-of-state, trade or graduate school, funds in the account may be used at any eligible higher educational institution in the nation and many abroad.
Funds can be used for tuition, mandatory fees, books, supplies, and equipment required for enrollment or attendance; certain room and board costs, certain expenses for “special needs” students…
And as it happens, there is a report on the use of such accounts today in Inside Higher Ed with a link to a GAO study: