Did you know a child is seven-times more likely to go to college and graduate if they know they have a college savings account in their name?
Our trustee, Angela Baier does, and she is deeply passionate about helping all Colorado families save for their children’s education.
Angela is the CEO of CollegeInvest, the fastest growing 529 program in the country, serving more than 350,000 families across all 64 of Colorado’s counties.
We recently sat down with Angela to learn more about CollegeInvest and her thoughts on a new bill under consideration at the Colorado State Capitol to further help working families save for their children’s future.
Colorado Succeeds: Tell us about 529 accounts and why they’re so important?
Angela Baier: A 529 account is a tax advantaged college savings plan to help Coloradans achieve their higher education goals. 529 savings can be used for universities anywhere in the country, as well as community colleges, vocational-technical schools, technical colleges, or any type of post-high school credential program.
529 college savings accounts are incredibly important because they significantly improve the likelihood that a child will go to college simply by having an account in their name. Surprisingly, our research shows that it doesn’t matter how much money is in the account. Just growing up knowing that someone believes in you and has invested in your future changes the conversation in the home. It elevates the expectation and dreams of children across Colorado.
CS: What role does CollegeInvest play?
AB: At CollegeInvest, a nonprofit state agency, we focus on supporting middle and lower-income families who make too much money for need-based financial aid, but not enough to avoid significant student loan debt. With the rising cost of higher education, the easier we make it for all families to invest the more we can bolster the long-term success of their children.
Currently, every dollar that you save with CollegeInvest you can deduct from your state taxes. That’s only for individuals right now, but there’s currently a bill in the Colorado legislature to expand a tax incentive to businesses.
CS: Tell us more about the new bill and the benefits for Colorado businesses and families.
AB: HB18-1217, the Working Families College Savings Act, is a bipartisan bill that brings a business solution to the rising cost of higher education and the rising student debt that families are experiencing. The bill would create a tax incentive for employers to make contributions to their employee’s CollegeInvest college savings accounts. Like other employee benefit programs, businesses would be able to customize the program, offering 529 contributions as a bonus or a match, for example. The tax credit to businesses would be maxed at $500 for each employee per year. For every $5 the business contributes they get $1 back on taxes.
This is a promising opportunity to help families save more for their children’s future. When we talked to our customers, 87 percent of them said they just can’t save any more than they already set aside. About one-third are saving an average of $419 a year. This is better than nothing, but certainly not enough to cover the cost of college or other postsecondary education. There have been other efforts to help Colorado families save, but none of notable success. For example, there’s an option to deposit your state tax refund directly to your 529 account. However, if families are struggling to pay off credit card debt, we know that refund is going to more immediate needs rather than long-term savings. HB18-1217 creates opportunities for families to save more by bringing employers into the equation.
CS: What are CollegeInvest customers saying about the legislation?
AB: Ninety-three percent of families we polled said they would open an account or contribute more if their employer contributed. Eighty-three percent thought the state should incentivize employers to participate. So, there’s support for both employers to take this on, and for the state to support the process and incentives. We’re excited about the legislation because we think it’s really going to lift everyone up, both business and the employee, but ultimately it’s the children who will benefit from the savings.
CS: What are CollegeInvest business partners saying about the legislation?
AB: The response has been positive. When we talked to our business partners, sixty percent of them said they would be interested in starting a program if there was a tax incentive. Many chambers of commerce and businesses across the state have signed up to support the legislation. It’s good for all of Colorado but especially good here on the Front Range where employment is so competitive. Adding a 529 contribution program to an employee benefits package would give companies a competitive advantage to hire.
CS: What can Colorado Succeeds members do if they want to get involved?
AB: Two things. Businesses and individuals can sign an online form to show their support for HB18-1217 on our website. Additionally, if passed, the incentive program will launch January 1, 2019. Now is a great time for businesses to start thinking about how they might budget and incorporate this program into their existing employee benefits package.