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In 2020, Colorado started putting $100 into a 529 savings account for every newborn or adopted child in the state. The hope was to encourage families to start saving for college early on, and recent data show that it’s working.
As of last week, more than 10,000 Colorado families have signed up for the First Step program, and CollegeInvest, the state-run nonprofit overseeing the project, has committed over $1 million to college savings accounts, The Colorado Sun reported.
A 529 account is a free-to-open tax-advantaged savings plan that allows families to save for education expenses with the help of the state. Investment in the account grows free of state and federal taxes, and every dollar can be deducted from state taxes. Even if parents choose not to invest themselves, the state gift—which has now increased to $110—will grow over time.
The program is showing promise, even as mind-sets around higher education are shifting. The large wave of participants joining the initiative coincides with a steep decline in college enrollment, with the National Center for Education Statistics reporting undergraduate enrollment was 15 percent lower in fall 2021 than in fall 2010. Over 40 percent of that drop occurred during the pandemic.
Angie Paccione, executive director of the Colorado Department of Higher Education, told the Sun she was “almost stunned” by the volume of parents creating college savings accounts for their kids.
“When you have an initiative that meets the needs of Colorado families, they will surprise you in the uptake,” Paccione said.
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