UMaine Researchers to Develop Pilot Project for College Savings Accounts
Contact: Dara McIntire, Research Assistant; Philip Trostel, Associate Professor of Economics and Public Policy, 207-581-1651
ORONO, Maine — College can seem like an unreachable dream for students whose families may be unaware of the financial resources available or the options for starting a college savings account. Researchers in the Margaret Chase Smith Policy Center at the University of Maine will address that problem with help from a $6,500 grant from the Cummings Fund at the Maine Community Foundation (MCF).
Economist Philip Trostel and research assistant Dara McIntire will work with an elementary school, financial institutions and other organizations to establish a prototype college savings program that is affordable, simple and sustainable. Long-term success of the project will be measured by the increase in student expectation that college is the next necessary step. The researchers hope that this new pilot project can be expanded for statewide use.
The grant from MCF will help with logistical concerns, including legal issues, support, partnerships and publicity.
“Opening college savings accounts for a large portion of Maine families would be a bold, ambitious move. The initiative’s success will draw on the foresight, courage and hard work of a broad range of organizations and individuals from both the public and private sectors,” says Trostel. “The long-term rewards of increased college attendance will be matched only by the level of commitment required to realize the vision of a college experience for all Maine children.”
The project follows previous work by Trostel and former Smith Center policy analyst Catherine Reilly. They conducted a research project, “Saving for College in Maine: A Review of Current and Prospective Programs,” for the Maine Community Foundation. Their 2004 report evaluated dozens of college savings programs in Maine, the United States, and around the world. Their investigation revealed that: (1) Maine children were not continuing to college as often as their national peers, and financial considerations appeared to be part of the reason; (2) savings for college was particularly low in households with lower incomes; and (3) asset-building programs, both in Maine and elsewhere, have demonstrated that low-income households can save through structured programs.
The proposal for a new and different type of college savings account in Maine is designed to encourage participation from all Maine families. A financial institution, with the consent of a parent or guardian, would open a savings account for the student. By starting early with elementary school-aged children, families are eased into college planning, and the process then becomes gradual and less intimidating. Regular deposits to the account provide a kind of continual affirmation of the student’s educational ability and of the expectation to attend.
Students and families come to see that financing college is not contingent upon how much money is saved, says Trostel. Rather, they understand that realizing a college education has more to do with the level of commitment to making it happen, and in knowing all the available resources, including grants, scholarships and loans.
More information about the pilot program is available from the Margaret Chase Smith Policy Center, 207-581-4133. To learn more about the Maine Community Foundation call toll-free 1-877-700-6800.