Maine newborns to get a head start on college saving
According (subscription required) to the Wall Street Journal, "Starting next year, children born (in Maine) will be eligible for a $500 grant that will be used to open and fund a Maine 529 savings account. The funds will be donated by the Harold Alfond Foundation, which coordinates charitable giving for the late Harold Alfond, the founder of Dexter Shoe Co."
What a great idea. By giving families the money at birth, it will have a full 17 or so years to compound before it's put to use. Assuming a rate of return of 7%, that money will grow to about $1579. By giving kids the money earlier, less money is required. In addition, the seed money for the 529 plan will likely spur many families to start saving for college themselves.
I wonder if someone like The Gates Foundation would explore trying a program like this on a national scale. It's a wonderful idea, and comparatively inexpensive. In Maine, it will cost between $7 and $9 million per year -- a small price to pay if it encourages more people to start saving for college sooner. By giving the money directly to families for their 529 plans, a lot of bureaucracy is avoided, and the money is allowed to be used for its intended purpose: education.