BOULDER – During a ceremony at CU-Boulder Monday, Gov. Jared Polis signed a bill designed to give every child born in Colorado $100 in a college savings account.
HB 19-1280 provides $100 for 529 plans, also known as qualified tuition plans, for each child born in Colorado. The funds will come from the CollegeInvest program, an existing program in the Department of Higher Education.
Under the plan, every child born or adopted in Colorado between Jan. 1, 2020 and Jan. 1, 2040 would be eligible for $100 adjusted for inflation each year after 2021. From that point on, it is up to the parents or guardians contribute more money to set aside for college.
The bill gives authority to the state treasurer to pursue donations from private organizations or other people to help fund the initiative. If the fundraising efforts from CollegeInvest fall short, the program is directed to take funding from the Scholarship Program or matching grant program. However, In the fiscal notes for the legislation, CollegeInvest is “directed to increase available revenue and may not reduce existing levels of scholarship or matching grant funding.”
The state estimated that anywhere from 2.5% to 52.5% of Coloradans could use the benefit, based off of similar programs from Massachusetts and Rhode Island, which had drastically different participation rates.
Part of the thinking behind the program is a belief that a child with money already set aside for college is more likely to consider pursuing higher education than a child who starts with nothing after graduating high school. It is also considered to be a way to help a potential student perform better in college without the need to worry as much about funding.
The state estimates the program could cost anywhere from $200,000 to $3.4 million in 2020 assuming 65,513 children are born or adopted that year.
If parents or guardians choose not to participate in the program five years after the birth or adoption of their child, the money would be designated for another. Parents and guardians would also be allowed to deposit money into that account as well.
The bill also creates an advisory board composed of the state treasurer or a state treasurer designee. It would also require a CollegeInvest employee to serve on the board as well as an individual who is not a CollegeInvest employee.
The law also requires the state to develop a marketing program that makes all parents aware of the program but is specifically targeted toward low to middle-class Coloradans.
Read more on how 529 plans work with this guide from the Security and Exchange Commission.
