College savings pilot launches in Worcester
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Treasurer Goldberg provided a glimpse of her college savings account plan last week while announcing findings and recommendations of her office's financial literacy report.
A pilot program launched by Treasurer Deb Goldberg on Monday will make college savings accounts available to Worcester kindergartners and start them off with an initial $50, an effort planned to eventually expand statewide.
Goldberg is visiting Worcester on Monday to announce the college savings program, dubbed "$eedMA," at the Jacob Hiatt Magnet High School. Through the program, each kindergartener in the city's public schools will receive a commitment of $50 to a "529" college savings account at the start of the next school year.
The $50 initial deposit is intended to "help jump start families" as they make their own contributions to the account, according to a fact sheet from Goldberg's office. Earnings in the account grow tax-free, and each account can hold a maximum of $375,000 per beneficiary.
"Access to an affordable higher education is imperative to strengthening Massachusetts' economy," Goldberg said in a statement. "I cannot think of a city more uniquely positioned to take on the leadership role of this college savings pilot program than Worcester. In the upcoming months, we will develop a standard that we hope can be implemented across the state."
The accounts are funded through public-private partnerships, according to Goldberg's office. Santander Bank is investing $50,000 in the program. Other partners are being sought.
The seed-funded accounts are intended to increase the percentage of Worcester children saving for higher education, boost post-secondary enrollment and graduation rates, and deliver financial education to both students and parents.
Worcester families will be able to open $eedMA accounts for their kindergarteners at the beginning of the 2016 to 2017 school year. The accounts are offered through Massachusetts Educational Financing Authority's U.Fund, which is sponsored by the state and managed by Fidelity Investments.
"In our years of work with families, we understand that opening a college savings account is a critical first step in the college planning process," MEFA Executive Director Tom Graf said in a statement.
The college savings program, within Goldberg's Office of Economic Empowerment, follows closely behind a report from a financial literacy task force the treasurer convened to examine how to improve economic skills and knowledge in the state. The report, released Dec. 3, found that many families are not introduced to college savings accounts early on and lack information about financing higher education.
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