Children with college savings accounts are three times more likely to enroll in college
(Apr. 8) — The House Finance committee passed a bill sponsored by Speaker KC Becker and Rep. Leslie Herod that would create a new strategy to incentivize and streamline the college savings process for every child born in Colorado.
“Creating college savings accounts for our kids has been highlighted as an important wealth-building tool that can tremendously help address the economic and racial barriers to building wealth in this country,” said Rep. Herod, D-Denver. “If we know there is a tool that is going to help pull many of our students and families out of poverty and into higher education, why wouldn’t we try it?”
Children with college savings accounts are twice as likely to expect to go to college.
With HB19-1280, a program will be created to help and encourage Colorado parents to open a College Savings Account (CSA) for their children. Beginning in 2020, $100 of seed money will be contributed to the CSA if an account is opened within the first five years of the child’s life.
“The College Kickstarter program will create funding for a college savings accounts for every child born in Colorado,” said Speaker Becker, D-Boulder. “This will help give Colorado’s kids a head start and help us invest in our future. Helping families and individuals save for higher-ed is a win-win for our students and our state.”
Research has shown that even having $50 in a college savings account has many long-term benefits related to educational and financial success. A 2018 report found that 35 percent of US parents aren’t saving for college for their children.
Kids with CSAs are three times more likely to enroll in college and four times more likely to graduate. CSAs also help reduce student loans. One study found that college graduates whose parents had a college savings account borrowed on average $3,209 less in student loans.
State Treasurer Dave Young testified in support of the bill. “I’m singularly focused on the financial health of Colorado and therefore in strong support of College Savings Accounts,” Treasurer Young said.
The bill was unanimously approved by the committee and now heads to the House Appropriations committee.