Children born or adopted in Colorado can soon have a college savings account partially funded for them by the government.
Gov. Jared Polis on Monday signed , setting aside $100 for all Colorado kids born or adopted between 2020 and 2040. The amount is adjusted for inflation, so it may be more than $100 in future years.
The new law creates savings accounts for Colorado children through CollegeInvest, a division within the Department of Higher Education that does not use taxpayer dollars. As much as $3.4 million from a CollegeInvest scholarship fund to pay for the new law next year.
“We are using that scholarship fund but it will not negatively impact our other programs,” said CollegeInvest CEO Angela Baier in an interview before the bill signing. “We’ll continue doing matching grants at the same level and we’ll continue doing scholarships.”
When a child is born in Colorado, $100 will be placed in an investment fund. Before the child turns 5, his or her parents must open their college savings account. When they do, the $100 or more in seed money is transferred to the parents’ account. If they don’t open the account within five years, the money remains in the fund and will instead be used to start another child’s account.
Under the new law, the state must implement a “robust marketing and outreach plan” to let parents known about their accounts. Parents can add to the account and receive federal and state income tax benefits when they do. The money must be spent on post-secondary education.
“Our name is CollegeInvest but that is a little misleading because it includes trade schools,” Baier said. “I say everything from hairdressers to Harvard. Itap anywhere in the country, itap any certificate or credential after high school.”
How many Coloradans will take advantage is unknown. in two Massachusetts cities signed up just 2.5 percent of children, but a Rhode Island program offering $100 for every child, like the Colorado law, has a . Baier said CollegeInvest currently has enough money to fund the program for 10 years if there is 10 percent participation.
“I feel confident that not only do we have the money for the first many, many years of this program, but that we’ll be able to fund it for the full 20 years that the bill was written for,” she said.
HB 1280 passed the House on April 17 by , with Republican Rep. Rod Bockenfield, of Watkins, joining all Democrats in favor. It passed the Senate on April 29 by , with eight Republicans joining all Democrats in favor.
During the Senate debate, Republicans raised concerns about the fiscal feasibility of the bill, about taking money from a scholarship fund, and about privacy concerns because the Department of Education will have access to information about the birth of every child.
“It is not going to do what we say itap going to do,” said Sen. Bob Gardner, a Colorado Springs Republican. He argued that a child’s ability to save for college has far more to do with family expectations than “the government giving someone $100 to start a savings account, which may or may not receive further contributions.”
