AUGUSTA – Buried deep within the verbiage of his 50-minute State of the State address this week, Gov. John Baldacci mentioned that every baby born in Maine in 2006 will be offered a $50 college savings account grant.
What the governor didn’t mention is that the grants won’t cost taxpayers a penny.
While Mainers tend to rank well nationally in school performance, state officials have long been concerned because not enough high school students go on to college. The reason many don’t go is lack of aspiration.
“Saving for college has also been a barrier for too many Maine families,” Baldacci said in his annual speech, in which he announced an expansion to the existing NextGen College Investing Plan administered by the Finance Authority of Maine and state treasurer. The expansion needs no legislative action.
Parents of every one of this year’s newborns will be notified that they’re eligible for the $50 in college start-up money. The money does not come from the state’s general fund, but rather from administrative fees collected on NextGen accounts nationally, FAME’s Ann Haskell said Friday.
A portion of that money comes back to the Maine program. Some is used for scholarships, and some to reduce initial fees for Maine participants.
FAME, a quasi-state business and educational loan guarantee agency, has been offering through NextGen $200 in college fund start-up money to parents with annual incomes of up to $54,000 a year, if the parents kick in $50 of their own. Money earned in NextGen is tax-free and also tax-free upon withdrawal if used for education costs.
The matching program will continue for those eligible under income guidelines, but NextGen in Maine will now throw in the $50 match too. For others, FAME will offer $50 in start-up money regardless of income.
FAME’s Haskell said the program is aimed at building aspirations for young Mainers to go to college as well as setting up a way to compound investments. For some youths who never gave college serious thought, just knowing an account is growing savings might be enough incentive to get them to pursue higher education, Haskell said.
“Any dollar they save is a dollar they won’t have to borrow,” she said.
The governor mentioned several other education initiatives during his speech to the Legislature. He proposed $500,000 more for college-level courses for high-school students.
Baldacci proposed raising starting teacher salaries from the current statewide average of $27,000 to $30,000 a year. The state would pick up the entire $4 million cost of the raises for fiscal 2007, which starts July 1.
The governor also called for steamlining and removing redundancy from standardized assessments, which could lead to fewer of the tests.
He is also including in his proposed budget an additional $3 million to support high-performing, isolated small schools.
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On the Net:
Finance Authority of Maine: www.famemaine.com
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