This afternoon, Voices for Children Economic Stability and Health Policy Coordinator Aubrey Mancuso testified in support of LB 281, the Child Support for College Savings Act.
Nationally there is a growing recognition of the importance of addressing the issue of accessibility to higher education and LB 281 would be an important first step toward addressing this issue in Nebraska. With the cost of higher education increasing at a rate much faster than family incomes and state budgets that have restricted funding, college is becoming increasingly expensive and inaccessible for many students.
This creates two main challenges for the state; that our economy needs educated workers, and that young adults are increasingly burdened by student debt.
States and cities have started to take a leadership role in addressing the issues of access and affordability in higher education. One lesson that is becoming increasingly clear is that interventions meant to encourage higher education done at the high school level are coming far too late. In order to effectively encourage higher educational attainment, interventions should start with younger children.
Research has found that even small amounts of educational savings can increase a child’s likelihood of both attending and completing higher education. Thirty-three states now have some sort of educational savings program for children, with some states even providing universal savings accounts at birth.
Data from 2011 show that the majority of families currently saving in Nebraska’s 529 educational savings plan are higher income. While families in Nebraska with an adjusted gross income below $50K make up nearly half the state population, they only account for less than 7% of those saving in our 529 plans. Nebraskans with an income of over $100K make up less than 18% of the population but represent nearly half of all 529 plan participants. 6 Our current incentive for educational savings is not reaching those who need it most. LB 281 would be an important first step in helping lower income children access educational savings with the goal of ultimately increasing their higher educational attainment.