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Western Colorado University communication arts professor Jack Lucido, center, works with North High School mass media students in the classroom of communications teacher Susan Dunbar, standing at right, on November 4, 2019. The high school class is involved in a pilot program for concurrent enrollment with Western Colorado University. (Andy Colwell, Special to The Colorado Sun)

A new state initiative aims to give Colorado families a head start in the long race to save for higher education by offering $100 in seed money for the college savings accounts of every newborn or adopted child starting in 2020.

The initiative, called First Step and launched on Wednesday, is offered by the state-run nonprofit CollegeInvest. For those who enroll, the money will be placed in a CollegeInvest 529 higher education savings account for every newborn through at least 2040. 

A 529 account is a tax-advantaged savings plan that allows people to save for education costs with the help of states, state agencies or educational institutions.

The idea is to give the, on average, 66,000 children born in Colorado each year a head start by encouraging their parents to begin thinking about saving for their postsecondary pursuits before they get far from the delivery room, according to Angela Baier, chief executive officer of CollegeInvest.

Plans aren’t limited to traditional four-year higher education institutions, Baier said, but can also be applied toward vocational training, community college and graduate programs — any kind of credential post high school.

The funds invested in a 529 college savings account grow free of state and federal taxes, and every dollar contributed can be deducted from state taxes, she added. 

Through the First Step program, which allows families to open a college savings account for free, CollegeInvest aims for more people to begin saving, no matter the amount, Baier said.

Making the effort to save can alter a child’s trajectory, she stressed, pointing to statistics from the Colorado Fiscal Institute that show that kids are three times more likely to attend college and four times more likely to graduate if they know they have a savings account in their name.

Shove Chapel at Colorado College. (Jesse Paul, The Colorado Sun)

CollegeInvest is eager for more children to have accounts, Baier said, “so more children have the dream and expectation of going on to do something beyond high school.”

CollegeInvest, a nonprofit state agency that does not receive any taxpayer dollars, manages, administers and stewards dollars in individual trusts. Currently about 375,000 Colorado families save a total of $4 billion through the agency, according to Baier, who noted that it has a variety of investment options available for families with different money managers and different growth rates.

One of those plans currently allows families to open a 529 college savings account with no minimum deposit, but the First Step program goes further as it gifts them money to begin investing, Baier said.

“We just want people to save for college,” she said. “We’re agnostic as to how they save.”

The process to begin saving through the First Step program is a simple one: Families open a CollegeInvest savings account and complete a program application online. All that is needed to open a 529 college savings account is proof of a Social Security number or tax ID number for both the baby and one of their parents or legal guardians.

The First Step program was created by a bill passed during the 2019 legislative session and signed into law by Gov. Jared Polis. It complements the governor’s efforts to make college more affordable for Colorado residents at a time most jobs are demanding a degree or credential beyond high school.

The state is setting out to build a movement with many strategies that will lead to a culture in which people better embrace the idea of going to college, said Angie Paccione, executive director of the Colorado Department of Higher Education.

“We know that when students go to college, whether it’s two-year, four-year or technical, they’re more successful,” Paccione said.

She also noted that research has shown that families are more likely to be able to afford college by making a small investment into a 529 college savings account early on.

Angie Paccione speaks to Colorado Gov. Jared Polis at Red Rocks Community College on Thursday, Dec. 12, 2019, for a stop on his listening tour. (Jesse Paul, The Colorado Sun)

Through First Step, CollegeInvest encourages all Colorado families to save for college, particularly families in more vulnerable populations, Baier said. 

The program, the agency hopes, will open up a way for those families to move past that financial barrier to start saving. The program will also add to the range of scholarship and grant opportunities CollegeInvest has already had in place. The agency gives away $1.2 million each year in matching grants and scholarships, Baier said, describing First Step as a “natural evolution” of its current offerings.

CollegeInvest is pouring $12 million into the launch of First Step. CollegeInvest isn’t using taxpayer money to cover the $100 offerings. It uses funds generated by each investment account opened for a future college student, according to Baier.

It’s hard to say how many Colorado children will start their lives $100 ahead when it comes to saving for college, in part because CollegeInvest hasn’t been able to nail down a firm estimate of the average number of children adopted each year in the state, Baier said.

Results from other states with similar programs — where participation rates run 2-6% of the babies born annually — may give some indication.

Baier added that Colorado has more new 529 college savings accounts each year than the national average, so CollegeInvest hopes it will see greater success with First Step program accounts.

The bottom line centers on getting more families to begin investing in their children’s futures right after birth rather than waiting as many do — CollegeInvest’s biggest enrollment time is around ages 3-6 — and losing out on compound interest.

The agency realizes how much of an impact a college savings account has on a child’s direction after high school and his or her pursuit of a credential that will set the course for their life.

“It really can be life-changing,” Baier said, “and we want to change as many lives as we can.”

For more information on how to enroll, call 1-800-448-2424 or visit CollegeInvest’s website.

Erica Breunlin is an education writer for The Colorado Sun, where she has reported since 2019. Much of her work has traced the wide-ranging impacts of the pandemic on student learning and highlighted teachers' struggles with overwhelming workloads...