Rhode Island’s treasurer and governor-elect, Gina M. Raimondo, on Dec. 10 announced a policy change to make college savings more accessible for newborn children in that state. In January, it will be as simple as checking a box.
The Rhode Island Department of Health already requires new parents to fill out a birth certificate form. In January, the form will include a box for them to check to automatically enroll their newborn in the CollegeBoundbaby program and receive $100 in the state’s 529 college savings plan.
“Today, Rhode Island joins two other states that automatically deposit funds in their 529 plans for young children,” said Margaret Clancy, policy director at the Center for Social Development (CSD) at Washington University in St. Louis’ Brown School. This year, Maine announced a major change in policy to automatically enroll all newborns and deposit $500, and Nevada announced $50 deposits for all public school kindergarten students.
Michael Sherraden, director of CSD, proposed accounts for all children in 1991. CSD advises state officials on making their 529 plans inclusive. Clancy recommended that Rhode Island greatly reduce the minimum initial contribution for state residents and that the state streamline enrollment in the at-birth program. (The Rhode Island 529 reduced the minimum initial contribution from $250 to $25 earlier this year.)
“Both policy changes are important steps toward making postsecondary education accessible to Rhode Island children,” said Clancy, who participated in a roundtable discussion at the event. The new check-box enrollment with an automatic deposit also is an excellent example of state agencies working together so that all children can have college savings, Clancy said.
Since 2010, babies born or adopted as Rhode Island residents have been eligible to receive the $100 contribution to a CollegeBoundfund account. The program starts college savings early, allowing time for the money to grow. Previously, parents were required to complete an application to enroll their child in the state’s 529 college savings plan, and participation was very low.
Raimondo made the announcement at the Community College of Rhode Island in Warwick.
Afterward, Clancy presented research from SEED for Oklahoma Kids, a large-scale policy test of automatic and progressive accounts for all newborns. Findings include positive impacts on asset building as well as positive changes in attitudes and child development. Research results have informed 529 savings policies for all children in Rhode Island, Maine and Nevada.
CSD continues to work with several other states on policy innovations for child accounts.