What is giving away millions of dollars each year, building Maine’s future workforce, and isn’t state government or higher education? That would be the Alfond Scholarship Foundation, which last week announced it is automatically awarding each Maine newborn a $500 scholarship for college.
Previously, parents had to sign their babies up for the scholarship by their first birthday. Now, they will get a little notice in the mail saying their child has a NextGen College Investing Plan account, administered by the Finance Authority of Maine, with $500 in it. That money will grow over time, and young adults will be able to spend it on a four- or two-year college degree or certificate program, in or out of state, until they reach age 28.
The scholarship named for its benefactor, the late Dexter Shoe Co. founder Harold Alfond, is not just a generous gift to Maine’s young people but an investment based in research. Studies show that youth with a college savings account are more likely to attend college than those with no account.
In a study published in the Journal of Children & Poverty, researchers found that high school students who expect to complete a four-year degree, and have a college savings account, are about seven times more likely to attend college than those with no account. Even when controlling for children’s academic achievement, the parents’ level of education, and family income, children with some money saved for college are more likely to go to college than those with no savings.
“In a very basic way, having savings changes the way children think about college,” according to a related report published in January 2012. Even saving a small amount can help a student build a college-bound mentality.
The Harold Alfond College Challenge — which expects to pay $6 million for 12,000 Maine babies born each year, up from 5,000 babies annually when families had to opt in — was the first program of its kind in the country when it launched statewide in 2009. Now it’s the first of its kind to automatically enroll infants, according to Colleen Quint, president and CEO of the Alfond Scholarship Foundation.
It has done a valuable service to the state, and there are ways for others to build on it.
— If you are a parent, you can add a little bit to the account each month. So far, about 30 percent of families with the Alfond grant have contributed their own money. While the scholarship is important, it isn’t going to cover the cost of college on its own. When parents reduce the likelihood that their children will need to borrow large student loans, it can help not only with their long-term financial health but with their ability to succeed in and complete college.
— If you are a business owner, consider partnering with the Harold Alfond Foundation. Some businesses offer employees payroll deductions into their college investing accounts. Others incentivize their employees to open a college account by offering a matching grant. If Maine businesses are going to remain competitive, the state must boost college attainment.
The Maine Economic Growth Council’s annual Measures of Growth In Focus economic report for 2013 details how the state has made progress in improving high school graduation rates — to 83 percent in 2011, up from 74 percent in 2000. The percentage of high school graduates attending college within a year of graduating, however, has not budged from 60 percent. Yet demand for college-degree holders in Maine is growing — and is projected to be seven times greater than for high school graduates by 2018.
Maine residents should use the Alfond challenge to their full advantage, as one way to improve student aspirations statewide.