New program starts college savings accounts for St. Paul newborns
ST. PAUL -- Think of it as a new year's gift for St. Paul's most miniature learners: a college savings account for babies born to city residents.
Starting Wednesday, Jan. 1, St. Paul newborns will automatically receive that college account with $50 in it.
CollegeBound Saint Paul is modeled after programs in other cities like St. Louis and San Francisco, and is designed to encourage children and their parents to think about college early on.
Mayor Melvin Carter said it will cover the about 5,000 children who are born to city residents each year. Children who are born elsewhere and move to St. Paul before the age of 6 will be eligible to opt into the program.
“Our goal is to figure out, what’s everything we can do to ensure that St. Paul is a safe and promising place for the young people who grow up here?” Carter said. “This is a great opportunity to both invest in their long-term future, and their likelihood to go to college and to become taxpayers and teachers and professionals in our community.”
Carter said the college saving accounts are just one part of the city’s efforts to expand opportunities to everyone in St. Paul.
The city’s Office of Financial Empowerment works to help residents improve their economic situations, Carter said. It includes other programs that help residents file for the taxes they’re owed or improve their credit score. It’s also worked to promote worker-owned cooperatives in the city.
“If you can learn how to save for college, you can save for a rainy day, or you can save for retirement, or you can save for vacation,” Carter said. “It’s one more way we can help families meet their goals.”
Many families are too distracted by daily pressures to even start thinking about college plans, said Ikram Koliso, who runs the college savings account program for the city.
“Even small amounts of dollars, especially for children from low-income communities — that makes a huge difference,” Koliso said. “That helps them build a college-going identity, that tells them, ‘Your family, your community, care about you and your success.’”
Some research, including a 2013 study at Washington University in St. Louis, found that kids with college savings accounts with less than $500 in them are three times more likely to attend college than those with no savings account.
The program will also include some bonuses for families that take advantage of other financial services, Koliso said.
The program is expected to cost a little over $1 million each year for the next three years. State appropriations cover the first two years of the deposits. Carter said they’re hoping to foundations and other community partners will support the ongoing program.