Twice in the last two weeks, I’ve read several articles about new programs designed to create college bound children. Nebraska, St. Paul, MN and New York City all have new programs that automatically enroll children in 529 college savings plans.
Upon a baby’s birth, the State of Nebraska opens a 529 plan in the baby’s name. The plan encourages parents to make contributions to the plan. It also offers tax benefits to employers that match parents’ donations. For low-income households, beginning in 2022, the State of Nebraska will provide a 2-for 1 match for all contributions to the child’s account.
In NYC, the program operates similarly, but children are automatically enrolled in a college savings account when they enroll in kindergarten. At that time, the City makes an opening deposit of $100. It is then up to the parents (or family members) to continue making contributions. Research shows that low- and moderate-income children who have a college savings account with a balance of at least $100 are three times as likely to attend college and four times as likely to graduate from college than children without college savings accounts.
In St. Paul, the city automatically enrolls children in a 529 account at birth and deposits $50. As in New York City, after the initial deposit, the parents can continue to contribute to the account. CollegeBound St. Paul began enrolling children on January 1, but the program has been in the works since Mayor Melvin Carter proposed it in 2018.
College bound students could end poverty
Similar programs operate in other major cities. Based on Washtenaw County’s birth rate over the last decade, a program with a $50 opening deposit would cost taxpayers about $180,000 per year. That’s not a lot of money for a county that’s home to two state universities, a community college and multiple private colleges and universities. But it is a major investment in the county’s future. It’s also something that local donors and philanthropic corporations could get behind.
WCC would likely be the primary beneficiary of such a program when it comes time for those children to enroll in college. Between 2009 and 2019, WCC’s tuition rose by 30%. Using that as a base, and assuming the program started this year, children born in 2021 could expect to pay about $10,000 for a 60-credit degree at age 18. If that assumption holds, parents who put away as little as $1 per day could fully fund a 2-year degree for their child.
For some families $30 per month isn’t in the cards. Private donors or other philanthropic sources could fill in the gaps for children from low-income households. This kind of program could boost the high school graduation rate, the college graduation rate and eradicate poverty in Washtenaw County. It could create a solid pipeline of students for far less than the cost of other poverty interventions. Giving students the means to attend college could also reduce the incarceration rate.
$180,000 per year. That’s what it would take to create a generation of college bound children in Washtenaw County.
Photo Credit: Gideon Tsang, via Flickr