[V]ermont’s high-school graduation rate was 86 percent in 2013, according to the U.S. Department of Education – well above the national average of 81 percent that year. But the number of residents with college degrees is a different story. More than 50 percent of Vermonters lack college degrees, state officials have said.
Gov. Peter Shumlin says financial barriers are preventing middle- and low-income families from taking education to the next level. The statistics indicate that many Vermonters believe college is unaffordable, he said.
Shumlin held a press conference on Thursday to launch the new Vermont Universal Children’s Higher Education Savings Account Program Fund, which was created to help make the goal of college education more attainable by providing every Vermont child born into a middle- and low-income family with their own college savings account.
The program aims to open a $500 savings account for each child born into a low-income household, and $250 to those born into a middle-income household. The program does not utilize taxpayer dollars, but will instead rely on charitable donations to fund the accounts. The goal is to set aside about $3 million per year in state-managed savings accounts to help state residents pay for higher education.
Approximately 6,000 children are born in Vermont annually. About 40 percent come from low-income households.
Shumlin and other state representatives met at Burlington Subaru to celebrate and accept a $25,000 donation to the fund from Subaru of New England President and CEO Ernie Boch Jr. Wednesday. Because the college savings accounts will be entirely funded through philanthropy, Boch’s donation is one of many that will be needed to get the program off the ground.
“I want to express heartfelt gratitude to Subaru of New England and Ernie Boch Jr. for this generous donation to Vermont’s future,” Gov. Shumlin said. “Even a small amount of money deposited when a child is born can greatly increase the likelihood of that child entering and graduating college. These funds will help ensure a brighter future for children born in Vermont.”
If the program fails to generate $3 million per year, it will begin operating at a reduced rate of $100 for low income households and $50 for middle income households. An 11-person committee will convene in the fall to figure out how to solicit more donations and determine how much money can be set aside in savings account.
While the money won’t cover tuition, Rep. Jill Krowinski, the sponsor of the bill, has said that even a small amount of savings for college increases the odds that a student stays in school after high school graduation.
“Research shows that when low- to moderate-income children have a savings account with anywhere from $1 to $499 in it, they are three times more likely to go to college and four times more likely to graduate,” she said.
“Universal savings accounts for college is one strategy we can use to knock down barriers to higher education and help end generation poverty, by starting on day one,” said Krowinski. “This program is a triple win because it will help more low to moderate income children to go college, it’ll raise the financial literacy of those children and families, and we’ll have more qualified workers to meet workforce demands.”
