Department of Education to fund 10,000 college savings accounts
Published: Wednesday, June 27, 2012
Updated: Wednesday, June 27, 2012 17:06
The U.S Department of Education announced on May 31 that they plan to assist thousands of disadvantaged students access higher education through investing in college savings accounts.
“We believe that savings accounts play a key role in helping all students, especially those from low-income families, [to] access and succeed in college,” said U.S. Secretary of Education Arne Duncan in a press video released the same day via YouTube.
The College Savings Account Research Demonstration Project will commit $8.7 million of federal GEAR UP funds to support college savings accounts for students participating in the program, which is designed to increase their college readiness.
The project will provide approximately 10,000 students with savings accounts as well as counseling to develop smart financial habits.
Each student will receive $200 in seed funding to start the account, which the state will open automatically. Students will have a chance to earn an extra $10 per month in a dollar-for-dollar savings match program over the next four years, ultimately giving them the opportunity to save more than $1,000 for college. Savings will be available for students to use for educational expenses upon enrolling in an institution of higher education.
In addition, the research will be conducted as the project progresses on the impact of savings accounts on college “access and success.” This works by comparing the outcomes of students receiving savings accounts with a control group that will allow the project to inform strategies at the federal, state and local level.
“Empowering disadvantaged students with financial resources and skills will enable them to make smart investments in higher education and we’ll gain valuable knowledge about how to best serve these students in the future,” said Duncan.
Ensuring every American can attain college credentials is critical to President Obama’s plan for creating an “America Built to Last.” With two out of every three new jobs requiring some post-secondary education, completing college has never been more important.
However, it’s also never been more expensive, and students are borrowing more money to attend college. Within the CUNY system just last year, tuition hikes lead to mass protests, showing that even a $300 increase is out of the question for many students.
As mentioned on CUNY’s official website, 70 percent of full-time undergraduate CUNY degree students receive financial aid from federal Pell Grants and state TAP Awards. Annually, students receive more than $600 million from various programs to help meet the cost of attending one of CUNY’s various campuses.
Mayte Ortiz is a USG Senator who has been a student at Baruch since 2009. Studying International Business, Ortiz is part of the college’s SEEK program, a competitive program aimed toward financially disadvantaged students. It begins the summer before the student’s freshman year, allowing them to take classes and be part of a seminar that they call a “summer experience.”
“Financial Aid covers the summer class, and we also get ten semesters of financial aid through the Federal Pell Grant and TAP,” said Ortiz. “The financial aid we receive covers the entire tuition, and depending on how much money [a student’s] family makes, they can receive more money on top of that.”
The additional money is aimed assisting students with college related needs such as textbook and school supply purchases. Though SEEK assist students like Ortiz, she believes she would still have been able to benefit from financial aid.
“I don’t believe I would have received the same amount,” she said, “as the amount of financial aid I’ve received over the years has decreased. Within the last two years it hasn’t been as much, or as timely as it was before. I actually got my Pell check a couple week ago and I was supposed to receive it at the beginning of the semester.”
In a document released by the Mayor’s Advisory Task Force on the City University of New York, it is stated that since 1980 the state’s constant dollar appropriation for CUNY has decreased by 40 percent and the decrease has been accompanied by a corresponding, but not equal, increase in financial aid funding. This increase, however, has not been reflected in the amount of Ortiz’s aid.
“I think when I first started financial aid was a lot easier and people got more of it,” said Ortiz. “Especially in the summertime it was a lot easier, but now it’s a lot harder. I feel like if I wasn’t in the SEEK program things wouldn’t be as easy for me when it came to financial aid.”
In a report released by the White House Office of Communications on June 13 compiled by the Consumer Financial Protection Bureau (CPFB), thousands of college debt holders chimed in with comments about repayment difficulties.
“Borrowing for college can be complex and confusing,” said CFPB Director Richard Cordray in the report. “Private student loans provide little room for error and students need to know before they owe. The Bureau is committed to helping students get clear information to make the best choices for their financial futures.”
According to the press release by the White House, the most common problems reported by student loan seekers and holders were not knowing where to go for information and relying solely on school financial aid offices for support, debt unmanageability, and having trouble navigating the loan repayment process.
With this in mind, The Tickerattempted to contact the U.S. Department of Education, hoping to ask them how much impact they foresaw from providing 10,000 students with $1,000, when for many colleges, including Baruch College, that’s barely enough to cover the cost of a single class including books and classroom supplies.
There was no reply from the Department of Education about its developing programs at the time of printing this issue.