Over 20,000 Massachusetts babies have already begun saving for college.
BabySteps, a program from the Office of Economic Empowerment that jumpstarts families into saving for their children’s higher education, has cleared the new signup milestone.
The program, run by state Treasurer Deborah Goldberg, started in 2020. Families who enroll receive $50 in seed money into a U.Fund 529 college or vocational savings account through MEFA, or the Massachusetts Educational Financing Authority, within one year of their child’s birth or adoption.
“Putting aspirations, and putting your child and your family, on the first step towards a life of education and success means a great deal to all of us and is why we do our work,” Goldberg said.
Children are 30 percent more likely to attend higher education institutions when their families begin saving at an early age, Goldberg said. The take-up rate for 2021 was 12.4 percent of eligible families, the treasurer’s director of program evaluation Daphna Gluck reported during an OEE meeting in June. Gluck predicted that the rate will increase to over 13 percent for 2022.
U.S. Sen. Ed Markey said the program will help close the racial wealth gap in Massachusetts.
CommonWealth Magazine reported that families from richer communities in the state enrolled their children at much higher rates than poorer towns and cities.
The cities that exceeded the state average in 2020 and 2021 were Somerville, Newton, Cambridge, Medford, Waltham and Boston — highly educated and wealthier Boston-area communities, CommonWealth reported. Meanwhile, Gateway Cities such as New Bedford, Brockton, Chelsea, Lynn and Fall River had far lower take-up rates. Fewer than 1 percent of babies in Lawrence and Springfield opened savings accounts.
The fiscal year 2023 budget (H 5050) Gov. Charlie Baker signed includes $500,000 for the program, with a provision to try to close the economic and racial gap.
The funds to “sustain and increase participation in the program” will be subject to match contributions, provided that the money “shall be used to promote geographic, social, racial and economic equity and reduce barriers to enrollment in the program that persist in low-income communities and communities of color.”
“Education is the key to a strong middle class, but the exorbitant cost of a good education has weighed down so many families who are climbing the mountain to education and economic security,” Markey said.
While every penny counts and the seed money can start families on a savings path, $50 represents a tiny drop in the savings bucket. CollegeBoard estimates the average college tuition at a public, four-year university for the 2021-2022 school year was $10,980 for in-state students and $27,560 for out-of-state students. For private schools, tuition averaged $38,070 last school year before room and board.
Whether going through a divorce or paternity action, parents need to discuss how future college expenses are to be paid.
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