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How Does the Charles Schwab 529 Plan Compare for California Residents?

  • Writer: Mike Germain, CFA
    Mike Germain, CFA
  • Apr 17
  • 9 min read

How Does the Charles Schwab 529 Plan Compare for California Residents?

Propulsion Capital Management is registered to provide advisory services in the state of California. This analysis is written specifically for California residents evaluating 529 education savings plans.

 

Why 529 Plan Choice Matters for Californians

California does not offer a state income tax deduction or credit for 529 plan contributions — to any plan, including its own ScholarShare 529. That means California residents are free to choose any 529 plan in the country without sacrificing a home-state tax benefit. The decision comes down to fees, investment quality, fund selection, and convenience.


This article compares the Charles Schwab 529 Education Savings Plan against California's ScholarShare 529 and other top-rated plans available to California residents.


Source: California Franchise Tax Board – ftb.ca.gov/file/personal/deductions/


Contenders for California Residents

Feature

Schwab 529 (Kansas)

ScholarShare 529 (California)

Plan Manager

TIAA-CREF / Charles Schwab

TIAA-CREF

Minimum Contribution

$1

$0 (payroll) / $25 (lump sum)

Maximum Contribution

$550,000 per beneficiary

$529,000 per beneficiary

Total Expense Ratios

0.00% – 0.56%

Avg. 0.21% across all portfolios

Enrollment/Maintenance Fees

None

None

CA State Tax Deduction

Not applicable

Not applicable

Age-Based Options

10 Enrollment Year portfolios

Enrollment Year portfolios (Passive, Active, ESG)

Static/Individual Options

3 static + 13 individual fund portfolios

Risk-Based (active & passive) + Guaranteed

Underlying Fund Families

Schwab, DFA, Dodge & Cox, T. Rowe Price, Vanguard, TIAA-CREF

Nuveen (TIAA-CREF), Vanguard

Sources: schwab.com/529-plan; scholarshare529.com; ISS Market Intelligence 529 Fee Analysis Q4 2025


Schwab 529: Complete Fund Options and Historical Performance

One of the Schwab 529 plan's differentiators is access to individual fund portfolios built on low-cost Schwab index funds and institutional-quality funds from six different fund families: Schwab, Dimensional Fund Advisors (DFA), Dodge & Cox, Franklin Templeton (BrandywineGLOBAL), T. Rowe Price, and Vanguard. The plan also includes a TIAA Funding Agreement for capital preservation.


U.S. Equity Funds

Fund Name

Ticker

Exp. Ratio

529 Total Fee

1-Yr

5-Yr Ann.

10-Yr Ann.

Schwab Total Stock Market Index

SWTSX

0.03%

0.05%

17.57%

11.22%

13.86%

Schwab Fundamental U.S. Large Co.

SFLNX

0.25%

0.27%

19.32%

12.56%

13.37%

Schwab Fundamental U.S. Small Co.

SFSNX

0.25%

0.27%

18.16%

7.06%

10.29%


International Equity Funds

Fund Name

Ticker

Exp. Ratio

529 Total Fee

1-Yr

5-Yr Ann.

10-Yr Ann.

Schwab International Index

SWISX

0.06%

—

18.73%

8.31%

8.68%

Schwab Fund. Int'l Equity Index

SFNNX

0.25%

0.27%

34.48%

12.36%

10.79%

DFA International Small Company

DFISX

0.39%

0.41%

25.83%

7.63%

8.81%


Real Estate

Fund Name

Ticker

Exp. Ratio

529 Total Fee

1-Yr

5-Yr Ann.

10-Yr Ann.

Vanguard Real Estate Index

VGSNX

0.11%

0.13%

2.97%

3.46%

5.00%


U.S. Bond Funds

Fund Name

Ticker

Exp. Ratio

529 Total Fee

1-Yr

5-Yr Ann.

10-Yr Ann.

Schwab U.S. Aggregate Bond Index

SWAGX

0.04%

0.06%

4.29%

0.15%

N/A†

Schwab TIPS Index

SWRSX

0.05%

0.07%

3.75%

1.36%

2.68%

Dodge & Cox Income

DODIX

0.41%

0.43%

5.17%

1.48%

3.14%

Vanguard Interm.-Term Treasury

VSIGX

0.06%

0.08%

4.21%

0.18%

1.35%

BrandywineGLOBAL High Yield

BGHSX

0.54%

0.56%

3.38%

4.53%

7.61%


International Bond & Capital Preservation

Fund Name

Ticker

Exp. Ratio

529 Total Fee

1-Yr

5-Yr Ann.

T. Rowe Price Int'l Bond (Hedged)

TNBMX

0.53%

0.55%

3.27%

0.83%

TIAA Funding Agreement

N/A

N/A

N/A

—

—

†SWAGX inception: Feb 2017; TNBMX inception: Sep 2017 — 10-year data not yet available. Returns are trailing annualized total returns from MarketWatch. Past performance does not guarantee future results. Sources: schwabassetmanagement.com; marketwatch.com; schwab.com/529-plan


ScholarShare 529: California's Home Plan

ScholarShare 529 is California's official state-sponsored plan, managed by TIAA-CREF. It offers three categories of investment portfolios:


  • Enrollment Year Portfolios — Automatically adjust risk as the student approaches college

  • Risk-Based Portfolios — Active and passive options across equity, growth, conservative, and bond allocations

  • Guaranteed Portfolio — Capital preservation option


ScholarShare Fee Advantage

ScholarShare's average annual asset-based fee of 0.21% across all portfolios is less than half the national average of 0.49% for 529 plans. There are no sales charges, start-up fees, or maintenance fees.

Source: ISS Market Intelligence 529 Fee Analysis Q4 2025, cited at scholarshare529.com/investment/compare/


ScholarShare Scale

ScholarShare manages over $19.2 billion in assets across more than 487,000 accounts, adding 50,000+ student accounts annually.


Where the Schwab 529 May Have Advantage for Californians

1. Broadest Fund Selection in the 529 Space

With access to Dimensional Fund Advisors (DFA), Dodge & Cox, T. Rowe Price, Vanguard, and Schwab's own index funds, the Schwab 529 offers institutional-quality diversification that most state plans — including ScholarShare — don’t offer.


2. Ultra-Low Expense Ratios

Schwab's individual index funds carry expense ratios as low as 0.03% — among the lowest in the industry.


3. Integration with the Schwab Ecosystem

For families already using Schwab for brokerage, banking, or retirement accounts, the 529 plan fits into a single dashboard.


4. Low Minimums, No Fees


Where ScholarShare Has the Edge

1. Lower Average All-In Fees

While Schwab's individual index funds are cheap, some Schwab portfolios run as high as 0.56%. ScholarShare's blended average of 0.21% is more consistently low across all options.


2. Simplicity

ScholarShare is designed for the average California family with automatic enrollment year adjustments.


3. CalKids Integration

California's CalKids program deposits seed money into ScholarShare 529 accounts for eligible children born after 2022.

For additional information on seed money deposits see Source: calkids.org


4. Risk-Based Active, Passive, and ESG Options

ScholarShare offers actively managed, passively managed, and ESG enrollment year portfolios — giving investors meaningful choice in management approach.


Enrollment Year (Age-Based) Portfolios: Glide Paths and Performance

Both the Schwab 529 and ScholarShare 529 offer "enrollment year" portfolios — age-based options that automatically shift from aggressive (equity-heavy) to conservative (bonds and capital preservation) as the student approaches college. This section compares the two plans' glide paths and historical performance.


How Enrollment Year Portfolios Work

You select a portfolio matching the year your child is expected to start college. The plan automatically rebalances quarterly, gradually reducing stock exposure and increasing bonds and capital preservation. This "set it and forget it" approach is the most popular choice for 529 investors in both plans.


Schwab 529 Enrollment Year Portfolio — Asset Allocation Glide Path

The Schwab 529 plan uses just four underlying funds across all its enrollment year portfolios, keeping the approach simple and ultra-low-cost:


  • Schwab Total Stock Market Index Fund (SWTSX) — U.S. equities

  • Schwab International Index Fund (SWISX) — International equities

  • Schwab U.S. Aggregate Bond Index Fund (SWAGX) — U.S. bonds

  • T. Rowe Price International Bond Fund (TNBMX) — International bonds

  • TIAA Funding Agreement — Capital preservation (guaranteed minimum rate)


Portfolio

U.S. Stocks

Int'l Stocks

U.S. Bonds

Int'l Bonds

Capital Pres.

Total Equity

Fee

2044-2045 (age ≤1)

55.00%

37.00%

5.60%

2.40%

—

92.00%

0.07%

2042-2043 (age 2-3)

54.00%

34.00%

8.50%

3.50%

—

88.00%

0.08%

2040-2041 (age 4-5)

50.00%

31.60%

12.80%

5.60%

—

81.60%

0.09%

2038-2039 (age 6-7)

45.70%

28.00%

18.40%

7.90%

—

73.70%

0.09%

2036-2037 (age 8-9)

39.00%

23.50%

23.00%

9.50%

5.00%

62.50%

0.10%

2034-2035 (age 10-11)

32.20%

18.90%

27.20%

11.70%

10.00%

51.10%

0.11%

2032-2033 (age 12-13)

26.10%

15.30%

30.50%

13.10%

15.00%

41.40%

0.11%

2030-2031 (age 14-15)

19.20%

10.80%

31.50%

13.50%

25.00%

30.00%

0.11%

2028-2029 (age 16-17)

12.40%

7.00%

31.90%

13.70%

35.00%

19.40%

0.12%

Enrolled (age 18+)

8.20%

4.30%

29.80%

12.70%

45.00%

12.50%

0.12%

Source: Schwab 529 Plan Description (PDF), February 2026, pages 20-21. Fees include underlying fund expense ratios plus 0.01% plan management fee and 0.01% state administrative fee. schwab.com/529-plan


Key takeaway: Schwab's glide path starts at 92% equity for newborns and gradually reduces to just 12.5% at enrollment, with the TIAA Funding Agreement growing from 0% to 45%. The all-in fees range from just 0.07% to 0.12% — among the lowest enrollment year portfolio fees in the entire 529 industry.


ScholarShare 529 Enrollment Year Portfolio — Asset Allocation Glide Path (Passive)

ScholarShare offers Passive, Active, and ESG versions of its enrollment year portfolios. The table below shows the Passive option, which is the most directly comparable to Schwab's index-based approach. ScholarShare uses Nuveen (TIAA-CREF) index funds plus Vanguard for real estate, high-yield bonds, and TIPS.


Portfolio

Equity

Fixed Income

Capital Pres.

Inception

2042/2043 Passive (17+ yrs)

80.00%

20.00%

—

5/16/2025

2040/2041 Passive (15-16 yrs)

~80.00%

~20.00%

—

7/14/2023

2038/2039 Passive (13-14 yrs)

74.50%

25.50%

—

6/11/2021

2036/2037 Passive (11-12 yrs)

~70.00%

~30.00%

—

1/24/2020

2034/2035 Passive (9-10 yrs)

65.00%

35.00%

—

1/24/2020

2032/2033 Passive (7-8 yrs)

~55.00%

~45.00%

—

1/24/2020

2030/2031 Passive (5-6 yrs)

42.50%

53.70%

3.80%

1/24/2020

2028/2029 Passive (3-4 yrs)

29.50%

51.10%

19.40%

1/24/2020

2026/2027 Passive (1-2 yrs)

19.80%

39.60%

40.60%

1/24/2020

Enrolled Passive (Now)

13.90%

36.10%

50.00%

1/24/2020

Source: ScholarShare 529 Enrollment Year Investment Portfolios, individual portfolio pages at scholarshare529.com/investment/enrollment-year/. Asset allocations as of February 4, 2026.


Comparing the Two Glide Paths

The Schwab and ScholarShare glide paths follow similar philosophies but differ in key ways:


  • Schwab starts more aggressively: 92% equity for the longest-horizon portfolios vs. ~80% for ScholarShare. This means Schwab's youngest-beneficiary portfolios have higher expected returns — and the potential for higher short-term volatility.

  • Capital preservation starts earlier at Schwab: The TIAA Funding Agreement enters at the 2036-2037 portfolio (age 8-9) with 5%, growing to 45% at enrollment. ScholarShare doesn't introduce capital preservation until the 2030/2031 portfolio (age 14-15) at 3.8%.

  • Schwab uses only 4 funds + TIAA: A strikingly simple construction. ScholarShare uses 6-7 underlying funds including separate allocations to emerging markets, real estate, TIPS, and high-yield bonds — providing more granular diversification.

  • Schwab is significantly cheaper: 0.07%-0.12% all-in vs. ScholarShare's average of ~0.21% for enrollment year portfolios. Over an 18-year savings horizon, this difference compounds meaningfully.


Historical Performance: ScholarShare Passive Enrollment Year Portfolios

The following table shows historical returns for ScholarShare's Passive Enrollment Year portfolios as of 12/31/2025. (Schwab does not publicly disclose enrollment year portfolio-level returns; only the underlying fund returns shown earlier are available.)


Portfolio

1-Yr Return

3-Yr Ann.

5-Yr Ann.

Since Inception

2042/2043 Passive

—

—

—

12.50% (since 5/2025)

2040/2041 Passive

18.01%

—

—

14.94% (since 7/2023)

2038/2039 Passive

17.47%

16.56%

—

7.53% (since 6/2021)

2036/2037 Passive

16.92%

15.95%

8.68%

9.58% (since 1/2020)

2034/2035 Passive

16.37%

15.36%

8.29%

9.11% (since 1/2020)

2032/2033 Passive

15.42%

14.58%

7.74%

8.60% (since 1/2020)

2030/2031 Passive

13.78%

13.19%

6.88%

7.88% (since 1/2020)

2028/2029 Passive

11.69%

11.30%

5.66%

6.72% (since 1/2020)

2026/2027 Passive

9.19%

9.13%

4.29%

5.40% (since 1/2020)

Enrolled Passive

7.00%

6.13%

3.06%

3.45% (since 1/2020)

Source: Individual portfolio pages at scholarshare529.com/investment/enrollment-year/. Returns are average annual total returns as of 12/31/2025, net of all fees and expenses. Past performance does not guarantee future results.


Which Enrollment Year Approach Is Better?

For most California families choosing an enrollment year "set it and forget it" strategy:


  • Schwab wins on cost and simplicity of construction. At 0.07%-0.12%, Schwab's enrollment year portfolios are roughly half the cost of ScholarShare's. The 4-fund construction is elegant and well-diversified.

  • ScholarShare wins on diversification breadth. The inclusion of emerging markets, real estate, TIPS, and high-yield bonds provides exposure to asset classes that Schwab's enrollment year portfolios exclude. ScholarShare also offers Active and ESG variants.

  • ScholarShare has a track record advantage — with most portfolios dating to January 2020, investors can see 5+ years of actual performance history. Schwab's enrollment year portfolios don't publish composite returns, though the underlying fund performance gives strong indication of potential returns.


Other Strong Plans Available to Californians

Since California offers no home-state tax deduction, these out-of-state plans also deserve consideration:


Vanguard 529 (Nevada)

Built entirely on Vanguard index funds with expense ratios ranging from 0.13% to 0.42%. A perennial favorite among cost-conscious, index-oriented investors.



How to Choose: A Decision Framework for California Residents

Choose the Schwab 529 if you:


  • Already use Schwab and want everything on one platform

  • Want access to DFA, Dodge & Cox, or T. Rowe Price — fund families unavailable in most 529 plans

  • Prefer building a custom portfolio or want the currently least expensive enrollment year portfolios (0.07%)

  • Want the current lowest possible expense ratios (0.03% individual funds)


Choose ScholarShare if you:


  • Prefer a low-cost, straightforward, set-it-and-forget-it approach

  • Want enrollment year portfolios with a published performance track record

  • Have a child eligible for CalKids seed funding

  • Want Active, Passive, or ESG enrollment year options


Choose Vanguard 529 or my529 if you:

  • Prioritize the absolute lowest all-in expense ratios

  • Are comfortable with a pure index fund approach

  • Want extreme customization (my529) or simplicity (Vanguard)


The Bottom Line for California Families

Because California doesn't offer a state tax deduction for any 529 plan, you're free to shop nationwide on merit alone. The Schwab 529 stands out for fund diversity, ecosystem integration, and the lowest enrollment year portfolio fees we've seen — particularly if you want access to institutional fund families like DFA and Dodge & Cox. ScholarShare is excellent for California families who want simplicity, published performance history, CalKids integration, and the choice between active, passive, and ESG management.


The most important thing? Start saving. The difference between the best and second-best 529 plan is measured in basis points. The difference between saving and not saving is measured in tens of thousands of dollars.

 

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Propulsion Capital Management is registered to provide advisory services in the state of California. 529 plan rules, fees, and tax treatments are subject to change. Consult a qualified financial advisor or tax professional before making education savings decisions. Performance figures are based on publicly available data as of early 2026. Past performance does not guarantee future results.


Sources

·       Charles Schwab 529 Plan — schwab.com/529-plan

·       Schwab 529 Plan Description (PDF), February 2026 — schwab.com/529-plan

·       Schwab Asset Management Fund Products — schwabassetmanagement.com

·       Dimensional Fund Advisors (DFISX) — dimensional.com

·       Dodge & Cox Income Fund (DODIX) — dodgeandcox.com

·       Franklin Templeton / BrandywineGLOBAL High Yield (BGHSX) — franklintempleton.com

© 2026 Propulsion Capital Management. All rights reserved.

CFA® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

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