Submitted by Joe Beckmann (not verified) on September 5, 2008 - 3:28pm.
The rapid development of middle school improvement programs like Citizens Schools, Steppingstone Foundation, and others highlights a remarkable opportunity to start college planning early with serious cash or credit incentives at grades 7 and 8. There's been some real congressional interest in building on the Individual Development Account (IDA) model the New America Foundation has so long advocated.
It would not be difficult to leverage private investor commitments to match 529 investments of Earned Income Tax Credit cash, and, later, kid and grandparent cash investments from grades 10 onward, to build substantial 529/IDA assets. On admissions, those private investors could be reimbursed by Pell cash by eligible students. Since their investments would be legally at risk, they would earn tax free income, and thereby attract tax-incentive investment capital to create 529's of real substance. Since Pell ranges up to $4,000 per year, to reimburse these investors over the four or five years of college expenses, these savings accounts could easily exceed the $25,000 public 4 year colleges typically charge, guaranteeing tuition and leveraging additional financial aid for living costs, books, etc. Because 529's can be exempt from other financial aid formulae, this benefit can be even more valuable in paying the highest risk segment for the lowest income families, while opening private higher ed as well.
It is unfortunate that educational incentive programs - from newer initiatives like Citizen Schools, BELL, Posse, CityYear, JumpStart, YearUp, Youth Build, and older programs like A Better Chance, GEAR UP, Talent Search and Upward Bound - fail to link their academic catalyst to family-based financial planning and develop real family capacity to open college opportunities. With $25,000 or more in an educational 529/IDA account at the bank, many, many low and moderate income kids would think twice about sacrificing that kind of investment to take a job at WalMart and skip or put college off.
Obama's service learning package might, for that matter, lever even more private contributions and/or program related investments by the university endowments themselves, which was, after all, the point of most of those contributions in the first place. This would be a lot less controversial than Congressman Grassley's threat to tax those endowments, while they would grow faster, more securely, and to the advantage of all parties.
529's related to Pell and EITC
The rapid development of middle school improvement programs like Citizens Schools, Steppingstone Foundation, and others highlights a remarkable opportunity to start college planning early with serious cash or credit incentives at grades 7 and 8. There's been some real congressional interest in building on the Individual Development Account (IDA) model the New America Foundation has so long advocated.
It would not be difficult to leverage private investor commitments to match 529 investments of Earned Income Tax Credit cash, and, later, kid and grandparent cash investments from grades 10 onward, to build substantial 529/IDA assets. On admissions, those private investors could be reimbursed by Pell cash by eligible students. Since their investments would be legally at risk, they would earn tax free income, and thereby attract tax-incentive investment capital to create 529's of real substance. Since Pell ranges up to $4,000 per year, to reimburse these investors over the four or five years of college expenses, these savings accounts could easily exceed the $25,000 public 4 year colleges typically charge, guaranteeing tuition and leveraging additional financial aid for living costs, books, etc. Because 529's can be exempt from other financial aid formulae, this benefit can be even more valuable in paying the highest risk segment for the lowest income families, while opening private higher ed as well.
It is unfortunate that educational incentive programs - from newer initiatives like Citizen Schools, BELL, Posse, CityYear, JumpStart, YearUp, Youth Build, and older programs like A Better Chance, GEAR UP, Talent Search and Upward Bound - fail to link their academic catalyst to family-based financial planning and develop real family capacity to open college opportunities. With $25,000 or more in an educational 529/IDA account at the bank, many, many low and moderate income kids would think twice about sacrificing that kind of investment to take a job at WalMart and skip or put college off.
Obama's service learning package might, for that matter, lever even more private contributions and/or program related investments by the university endowments themselves, which was, after all, the point of most of those contributions in the first place. This would be a lot less controversial than Congressman Grassley's threat to tax those endowments, while they would grow faster, more securely, and to the advantage of all parties.