Children’s Savings Takes New England By Storm
Leading the country in Children’s Savings Account (CSA) development in recent years, New England is home to several innovative pilot programs. Each initiative employs a unique combination of public and private support to provide children with financial and educational opportunities. This push for expansion has been prompted by the potential for CSAs to fuel college expectations, improve economic mobility and foster financial literacy. These programs also aim to increase both high school and college completion rates by providing young students with the means to begin saving for the future.
Here are some of the programs that are leading the way for children’s savings in New England:
Connecticut Higher Education Trust (CHET) Baby Scholars (Statewide)
The CHET Baby Scholars program grants a $100 educational savings investment to children less than a year old, if their families open a Connecticut 529 account. If the families save $150 before the child is four years old, CHET will match this amount 1:1. Funds for this initiative are provided by residuals from the non-operational Connecticut Student Loan Foundation.
Harold Alfond College Challenge (Statewide)
Through the Harold Alfond College Challenge, the Harold Alfond Foundation will invest $500 for every baby born in Maine after 2013. This opportunity is also available for babies whose families have moved to Maine and have opened a NextGen 529 account before their first birthday. As an opt-out program, this educational investment is made automatically on behalf of the children, and additional contributions to the account can be made by parents, family or friends. In addition to the initial seed funding, NextGen offers matching grants to eligible accountholders.
$eedMA (Worcester, MA)
$eedMA, set to begin this fall for the 2016-17 school year, is a universal CSA program operating in the Worcester Public School System. A 529 account will be opened for each kindergarten student, with a $50 initial deposit funded by public-private partnerships. Aiming to boost college expectations and financial literacy, $eedMA plans to eventually expand to include every kindergarten student in Massachusetts.
Boston Saves (Boston, MA)
This fall, Boston Mayor Martin J. Walsh will launch a three-year pilot CSA program at five public schools. Each kindergartner will be given a $50 initial deposit to start their savings. This program’s goals include developing college expectations, providing financial education and improving higher education completion rates. The pilot has been funded by the Eos Foundation, which aims to end cycles of poverty through childhood investments.
Program in development (Coos County and Manchester, NH)
In New Hampshire, a bill proposing CSA pilot programs in Coos County and Manchester is currently awaiting a decision in the state Senate. Through this initiative, a $50 initial deposit would be provided to about 1,300 students. Funding for this program has not yet been determined.
CollegeBoundbaby is a Rhode Island CSA program, an extension of their CollegeBoundfund 529 plan. Streamlined in 2010, CollegeBoundbaby offers a one-time contribution of $100 to every baby born or adopted in Rhode Island on or after January 1, 2015. It employs an innovative opt-in feature, requiring parents to check “yes” on their normal birth certificate paperwork to receive the grant.
Vermont Universal Children’s Higher Education Savings Program (Statewide)
The Vermont state legislature recently passed a proposal to implement universal children’s savings accounts, with a prospective start date in 2017. The Vermont Student Assistance Corporation, along with philanthropic partners, will deposit $250 in an educational savings account for each child born on or after January 1, 2016. Depending on family income, children may be eligible for additional matched funding up to $250. Vermont also plans to develop financial literacy programs to support this initiative.
Overall, the New England states represent a distinctive regional push toward incorporating asset building into higher education policy and drawing support and involvement from community leaders, businesses and philanthropy. With their current momentum, CSA initiatives in New England can set an encouraging example for other part of the country.