Children's savings account programs spread in New England
CONCORD, N.H. — New Hampshire is considering a new program to help children save money for college, but the proposal lags years behind other nearby states in timing and target population.
Under a bill that has stalled in the New Hampshire Senate, every kindergarten student in Coos County and the city of Manchester would get $100 in seed money that could only be spent on higher education costs after they turn 18. Half the money would come from the state and half would come from the New Hampshire Charitable Foundation, and supporters hope eventually the program would match subsequent deposits made by families. Financial literacy workshops would help parents realize the importance of saving.
"We would put that money into bank accounts for every one of those children, and then begin very early on engaging the parent," said Rep. Mary Stuart Gile, a Concord Democrat.
Elsewhere in New England, Maine, Connecticut and Rhode Island all have statewide programs, and Vermont is working to get funding for the program lawmakers approved there last year. Massachusetts also is considering a state-wide program, and the city of Boston is launching its own pilot program at five kindergarten classes next fall. With the exception of the Boston program, all the others provide money to newborns rather than older children as New Hampshire proposes, giving the children a five-year head start on saving.
Melinda Lewis, who has extensively studied children's savings account programs, said while momentum is growing for such programs across the country, New England stands out.
"Every state somewhat has its own take on the concept, but it's the only place where you have this critical mass of policymakers who are using the same basic policy instrument — the children's savings account program — to pursue their education and economic policy objectives," said Lewis, assistant director of the Center on Assets, Education, and Inclusion at the University of Kansas.
Maine was the catalyst for many others, she said. The Alfond College Challenge program became the nation's first universal children's savings account program in 2009 and remains the most generous. Initially, parents had to enroll in the state's 529 college savings plan to qualify for the $500 grants, but only 40 percent were signing up during the early years.
"Everyone thought it was going to be wicked easy to give away money," said Brian Murphy of the Finance Authority of Maine. When that proved not to be the case, the state began in 2013 automatically depositing the money for every newborn.
Melissa Doucette, of Avon, Maine, is expecting a baby boy — and future grant recipient — in August. Back in 2009, her daughter, Caitlyn, was the 1,000th participant. The 7-year-old's account now stands at about $2,500, Doucette said.
"It's not a ton, we can't put in a lot, but we add 50 bucks here or there," she said. Caitlyn contributes, too.
"Whenever she gets birthday money, we take some of that and put it in her college fund," Doucette said. "I've told her all about college. I tell her you can pick something you want to do for a career and go and learn about it."
Research has shown that students with school savings are significantly more likely to enroll in and graduate from college than those with no accounts, Lewis said.
Vermont's plan calls for starting every newborn out with at least $250, with $500 deposits for babies in low-income families. Gov. Peter Shumlin's proposed budget calls for increasing the state's mutual fund registration fee to help pay for the program, in addition to private donations. Members of a committee appointed to advise the state on the issue have discussed recommending a more incremental approach — possibly a pilot project — if the funding doesn't materialize.
A bill that would allocate $50,000 to New Hampshire's pilot program has been tabled in the Senate. Sen. John Reagan, a Deerfield Republican who leads the Senate Education Committee, said members objected to providing special attention to limited locations. But Sen. Nancy Stiles, the committee's vice chairman, recently told a gathering of early childhood development advocates that she'd be willing to reconsider it.
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