Chicago, IL — On a vote of 65-46, the Illinois Children’s Savings Account legislation (HB3691) passed out of the Illinois House today with bipartisan support. The bill will help make college a reality for more Illinois students by automatically providing access to a college savings account at birth.
A small amount of savings can make a difference in whether a child eventually ends up attending and graduating from college. Research indicates that children from low-income households with savings for college of just $1-499 are three times more likely to attend college and four times more likely to graduate than low-income children who do not have savings accounts for higher education. Having savings for college helps build children’s expectations and fosters a college-bound identity, in which children see themselves as someone who will go to college.
HB3691, sponsored by Representative Robyn Gabel, will automatically open a 529 college savings account at birth for every child born in the state. The account will be seeded with an initial $50. Low- and moderate-income families will be encouraged to save through savings incentives – a one-to-one dollar match up to $150 per year. The program will be an expansion of the existing Bright Start College Saving Program, which is housed within the Illinois State Treasurer’s Office.
“We should be helping children build a financially secure future from day one.” said Representative Gabel. “Children’s Savings Accounts provide both hope and the means to expand educational and economic opportunity for Illinois families.”
The money saved by families through the Children’s Savings Account (CSA) program could help address critical gaps that financial aid may not cover, such as books, transportation or living expenses. These relatively small costs can loom large for students from low-income families. Having savings to cover them can make a big difference in whether students are able to complete college.
The Illinois Asset Building Group (IABG), a project of the Financial Empowerment Policy Unit at Heartland Alliance, is advocating, along with its partners, for the creation of a CSA Program.
“CSA programs around the country show us that low- and moderate-income families can and will save for their children if they are given the right opportunity and access to appropriate savings vehicles.” said Lucy Mullany, Coordinator of IABG and a Senior Program Manager with Heartland Alliance. “This program removes barriers to saving for college and supports a family’s aspirations for their child’s future.”
The bill, which now moves to the Senate where Senator Kimberly Lightford will be the Chief Sponsor, adopts policy recommendations from the bipartisan Illinois Children’s Savings Account Taskforce. Similar to other CSA models around the country, the program will be funded through public/private partnerships. If passed and signed-in to law, Illinois will join a number of states that are leveraging their existing 529 College Savings Plans to help more families save for college.
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The Illinois Asset Building Group (IABG) is a statewide coalition committed to increasing access to the tools people need to build financially secure futures for themselves and their children. Our work across issue areas includes examining barriers and solutions to the persistent racial wealth gap. IABG a project of Heartland Alliance. For more information, visit www.illinoisassetbuilding.org
Heartland Alliance, one of the world’s leading anti-poverty organizations, works in communities in the U.S. and abroad to serve people experiencing homelessness, living in poverty, or seeking safety. Heartland Alliance provides a comprehensive array of services in the areas of safety, health, housing, education, economic opportunity. For more information, visit: www.heartlandalliance.org