Among the new laws taking effect in 2020 is a program that seeks to give Illinois children a leg up, before they’re even able to crawl.
Every baby born in Illinois would receive $50 in a 529-style investment account to help pay for their future community college, university or trade school expenses.
Given tuition costs, $50 won’t go far.
But the intent is to spur parents and guardians to contribute more to their child’s future education; growth on money invested in 529 accounts, like Illinois’ Bright Start program, can be taken out tax free as long as it’s put toward secondary education.
“If starting that account convinces their parents they want to add to this and they want to add to it regularly, that’s really going to maximize, increase, the number of students going to college and decrease the amount of debt they’re graduating with,” Illinois State Treasurer Mike Frerichs said.
The treasurer’s office is charged with administrating the program, and with either convincing the legislature to appropriate the estimated $10 million annually it will take to fund it, or finding foundations, corporations and private donors to step up.
Critics question whether Illinois has the $10 million to do it.
“It’s a wonderful idea except where does the money come from? Our state is in deep fiscal stress and for us to say ‘it’s only another $10 million a year,’ that’s just fundamentally wrong,” said state Sen. Jim Oberweis, R-Sugar Grove.
Another Republican who voted against the measure (House Bill 2237), Rep. David McSweeney of Barrington Hills, said at the very least there should be a means test.
“Why should a billionaire’s or millionaire’s son or daughter get $50 from the state when the state’s insolvent? It doesn’t make any sense,” he said.
McSweeney also said he worries the program will ramp up.
The law allows the treasurer to seed less than $50 per child if that’s all the money appropriated to the program, but it also allows the treasurer to set rules that would put more money into the accounts.
Advocates of the program, which is modeled in part on those in states such as Maine, Rhode Island and Pennsylvania, say that college seed money doesn’t just kick start savings, it kick starts a child’s confidence.
“It is an actual move to begin to address some … deeply embedded structural problems” in low-income and minority communities where there’s a gap in higher education attendance, said Brent Adams with the Woodstock Institute.
Adams said knowing there’s money – just for him, just for her – can affect how a child behaves.
While the law takes effect in the new year, the treasurer’s office will spend 2020 setting up the program. The first babies eligible for the $50 seed money will be those born starting in January 2021.
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