Nebraska needs all its children, from every background, to maximize their opportunities for educational achievement and career success. New college savings policies just put into state law aim to promote that important goal.
Academic studies indicate that such college savings approaches are effective in boosting a student’s educational performance and likelihood of graduation. The benefit is especially significant for children from low-income families. A growing number of states are adopting such approaches, including Oklahoma, Colorado, Nevada, Pennsylvania and Massachusetts.
“It’s a very low-cost way of changing educational outcomes,” says Nebraska State Treasurer John Murante, who worked with a wide-ranging group of state senators on college savings proposals that were approved this session. Low-income families often aren’t aware of college savings programs, and once they have even a modest amount in such a plan, it generally spurs students and parents to focus on educational success and considerations of college and careers.
“It’s been shown to be significant in altering people’s attitudes and decision-making” for the better, Murante says.
Three policies, approved as a set this spring by the Legislature on a 48-0 vote and signed by Gov. Pete Ricketts, would:
» Create an account for each newborn. The accounts, called Meadowlark Scholarships, would be set up for each Nebraska resident born on or after Jan. 1, 2020, using monies from a cash fund created through philanthropic donations and any funds appropriated or transferred to the fund by the Legislature. No monies from the state government’s general fund would be used. The State Treasurer’s Office would oversee the fund, evenly distributing the fund’s investment income from the previous year to accounts opened in the previous year.
» Match contributions from low-income households. If a household’s income is 200% or less of the federal poverty level, the state would draw on the cash fund to allocate $2 for each $1 contributed by the household. Matches would be limited to $1,000 per beneficiary per year. The treasurer may approve up to $250,000 in matching scholarships each year.
» Incentivize employers to offer matching contributions to employees’ college savings plan. Beginning in 2022, an employer whose application is approved will receive an incentive payment from the state equal to 25% of the matching contributions made during the preceding year, up to $2,000 per employee per year. The state incentives, drawn from the cash fund, would be limited to $250,000 annually.
The projected annual expenditures from the cash fund for all these purposes is $300,000 by fiscal 2025, according to the Legislature Fiscal Office.
A group of Nebraska lawmakers, across party and philosophical lines, worked with Murante in developing college savings legislation this session: State Sens. Brett Lindstrom of Omaha, Lou Ann Linehan of the Elkhorn area, Anna Wishart of Lincoln, Andrew La Grone of Gretna and Justin Wayne of Omaha.
These new policies can encourage positive habits for students and families and broaden educational opportunity. State leaders are right to promote them, and philanthropists are right to support them financially.