In May, Nebraska Gov. Pete Ricketts signed legislation creating the Meadowlark Program to encourage families to save for college. As a result of this legislation, which unanimously passed the state legislature, Nebraska will automatically enroll every state-resident baby born, starting Jan. 1, 2020, in Nebraska’s NEST 529 college savings plan.
This development is another milestone in the children's savings account (CSA) movement, which documents state or local CSA programs available in more than 34 states. Nebraska joins several other states that have implemented universal child savings account policies including Maine, Nevada, Connecticut, Massachusetts, and Pennsylvania.
Families may choose to opt out of the accounts. Although the legislation did not include funds for initial deposits into the accounts, as some other states do, it created two programs to incent contributions by families, employers, and especially low-income families:
An employer matching contribution program. This program disperses incentive payments to employers who match their employees’ contribution into their child’s NEST account. Starting Jan. 1, 2022, employers who partially or fully match employees’ contribution from the previous year are eligible for and receive an incentive of 25% of their matched contributions, up to $2,000 per employee annually. The program is expected to award up to $250,000 total in incentives yearly.
A low-income matching scholarship program. Starting on Jan. 1, 2022, if the beneficiary’s family household income is at or below 200% of the federal poverty level, they can receive a matching deposit of up to 200% of the account owner’s NEST contribution, up to $1,000. If the beneficiary’s family household income is more than 200% but less than 250% of the federal poverty level, they can receive a matching deposit of 100% percent of the account owner’s NEST account contribution, up to $1,000. This program is expected to award up to $250,000 in scholarships annually.
If the funds are not accessed before age 30, funds will be reallocated for future babies’ accounts
I spoke with Margaret Clancy, policy director at the Center for Social Development at Washington University in St. Louis, who has been heavily involved with this work in Nebraska and is responsible for design and leadership of large-scale policy demonstrations, including SEED for Oklahoma Kids. Ms. Clancy said, “Features of the Nebraska policy lend itself to continuity and sustainability over time. The combination of creating an endowment and passing legislation unanimously, provides a sense of permanence for the policy.” Ms. Clancy added, “Universal child development accounts broaden the opportunity for all children statewide. Widespread 529 plan participation results in more equitable distribution of public resources.”
Nebraska State Treasurer John Murante, who championed the legislation, said, “Every Nebraskan with a dream of higher education deserves that opportunity, and this legislation helps future generations overcome the financial obstacles in their path.” He hopes every student in Nebraska will complete two or four years of college debt-free.
According to the Campaign for Every Kid’s Future, Children with college savings of as little as $1 to $499 are three times more likely to attend college and four times more likely to graduate. Additionally, children with college savings have greater college expectations and see themselves as college-bound. Rigorous research from the SEED for Oklahoma Kids randomized control trial demonstrates that CSAs have several positive impacts on young children and their families, including improving parents’ educational expectations for their children, increasing college savings behavior, reducing symptoms of depression in mothers, and improving children’s early socioemotional development.