Governor Heineman recently announced that September is college savings month in Nebraska and that there are events coming up in October where families can learn more about saving for their children’s higher education through a tax-advantaged plan. We appreciate the Governor’s interest in this issue, and recent research highlights why it is becoming more important than ever that families save for higher education.
A recently released report from the Pew Research Center found that 1 in 5 households, a record number, now has student debt. What’s more, the relative debt burden for households is the greatest for those at the bottom of the income spectrum. There is a growing recognition of the need to limit the role that loans pay in financing higher education.
Another report from the New America Foundation and the Center for Social Development found that having an educational savings account increases the likelihood of actually attending college. When other factors are controlled for, children who have an educational savings account are about six times more likely to attend college than those who don’t.
Cities and states across the nation are recognizing the importance of playing a role in promoting an educated future workforce and undertaking initiatives to help more families save. One of the most innovative models in the nation is the Kindergarten to College Program in San Francisco. Under this new program, every child entering public kindergarten in San Francisco will receive a savings account with an initial deposit of $50. Families can then contribute to the accounts and boost their savings rate through incentives that provide matching funds.
Another example is the KIDS Program that Kansas adopted in 2009. Under this program, families with incomes of less than 200% of the federal poverty level are eligible to receive matching funds from the state for every dollar they put in to an educational savings account up to a certain amount.
These examples highlight the growing recognition of the role that states and cities can play in promoting saving for higher education. We are pleased to see Nebraska highlighting the importance of educational savings and hope that the state will look for ways to help more families save for their children’s future.