Creating a College-Bound Culture

Private foundations have long promoted the idea of children’s savings accounts to help families save for their children’s college education. But states have only recently started seeding such accounts for their youngest citizens. The seed amounts tend to be small, but they can make a big difference, researchers say. Children who have even small savings accounts for college are seven times more likely to attend and graduate from college than those who have no savings accounts.

Maine, which launched the nation’s first statewide universal children’s savings accounts in 2008, has the most generous program. Its College Challenge program has a $6.3 million annual budget and is covered entirely by a private foundation. FAME, the state agency that administers the program, gets monthly birth records from the state, deposits a $500 grant for the newborn into a master account and notifies parents. Students can use the $500 grant, plus earnings, for higher education expenses at in-state and out-of-state colleges and vocational schools. Nevada and Rhode Island are trying versions of universal children’s savings accounts statewide, and Colorado plans to launch a pilot program for low-income preschoolers in November. None uses state funds.

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