Massachusetts To Offer $50 in College Savings to Every Baby
Friday, November 2, 2018
Posted by: Lindsay Broderick, Staff Writer
On Oct. 16, Massachusetts Treasurer Deborah Goldberg announced that beginning in 2020, the state will automatically deposit $50 into each 529 college savings account opened within one year of a baby’s birth or adoption. An estimated 70,000 families a year will have the opportunity to take advantage of the program, although the treasury estimates that only 10 percent of families will open accounts in the first year. Deposits will be made through the Massachusetts Educational Financing Authority and financed by a state treasury trust fund supported by private donors and public-private partnerships.
The new program, called SeedMA Baby, represents a statewide expansion of a pilot version tested with kindergartners in Worcester and Monson, MA, that began in 2016. In the pilot, each student received a $50 initial deposit to a college savings account (CSA). To date, the pilot has found that 65 percent of participating families had not saved for their child’s education prior to opening their SeedMA account, and 33 percent of participating families have made their own contributions to the accounts.
The new statewide program will partner with the Massachusetts Department of Public Health and other state health and social services agencies to encourage new parents to sign up for the accounts.
Bob Hildreth, founder and board chair of NCAN member Inversant, has donated $300,000 to support the program. “Recruiting families to take advantage of CSA programs is always difficult. The key is to offer education around the college process including steps families can take now to pay for colleges. We will know success if we get low-income and single-mom families to join. Then we can turn the conversation around education reform toward families.”
Other states offering universal CSA programs are Pennsylvania, Maine, Nevada, Rhode Island, West Virginia, and Connecticut, as detailed in this 2018 NCAN blog post about the new Pennsylvania program. Additionally, 13 states match 529 account contributions by middle- and lower-income families.