Two years into a publicly funded education savings program, Massachusetts officials are seeing a limited number of parents in poorer communities take advantage of some free start-up money.
As of the middle of July, fewer than 19,000 saving accounts have been created across the state since 2020. Shira Schoenberg wrote about this for CommonWealth magazine.
Shira Schoenberg, CommonWealth magazine: So the intent of the BabySteps program was to incentivize families at all income levels, but particularly lower income levels, to start saving for their child's college or post-secondary education. The idea is that while well-off families might think to open a college savings account soon after their child is born, a lot of families aren't thinking this way. And giving them a little bit of public money, $50 in an account, really starts parents thinking along the lines about, "Oh, maybe I should start saving now for my child's post-secondary education."
Carrie Healy, NEPM: And you report that so far, two years into this program, the average enrollment has been about 12% of babies born each year. But there's a disturbing side to that number, and that's these funds are going unclaimed in poorer communities. How does enrollment in a city like Springfield, for example, look compared to Cambridge or somewhere out near Boston?
If you look at cities like Somerville or Newton, more than a quarter of families with babies in those cities took advantage of the program. You know, the numbers were also pretty high in places like Cambridge, Medford, Waltham and Boston — kind of the Boston area — wealthier, better-educated communities.
But if you look at Lawrence and Springfield, fewer than 1% of babies born in those cities opened these accounts. There were fewer than 3% of families with babies who opened accounts in a lot of the gateway cities, like New Bedford, Brockton, Chelsea, Lynn, Fall River.
So there's really the disparity where the wealthier communities have lots of families taking advantage of this program, but the communities that're more economically struggling and tend to have lower education levels are not.
Did you get any sense as to why those rates were so uneven?
I think there's a lot of reasons. First of all, it's maybe a little bit intimidating to sign up. You do have to open an account with a financial institution. And there are questions, for example, about how you want to invest the money. That might be challenging for a family that's never had an investment before.
There can be a trust barrier. In a way, it sounds a little bit like a scam: check a box, give some personal information, you'll get free money. So there needs to be a way for families who have never heard of the program to understand that — yes, this is a legitimate program, it's not a scam.
You know, there certainly could be language barriers. If you go to the Fidelity website to try to sign up, the website is in English, although there are some opportunities for multilingual phone support.
And it may just be a matter of knowledge. In theory, you just need to check a box on your application for your child's birth certificate to get more information sent to you. But then you do have to go through the whole process of actually filling out a form, signing up for the program. And a lot of families just didn't do it.
Is this program set up similarly to other programs that exist elsewhere across the Northeast, across the country? And have they seen disparities in enrollment as much as this Massachusetts program has?
There are definitely other programs like this elsewhere in the country. There are programs in Maine, Pennsylvania, Rhode Island. Some individual cities like New York also have these programs. But, yeah, there's been research that shows that this is a real problem overall.
There are some things that programs can do to make it easier and more accessible for families to sign up. But national research has show that there are many barriers to families signing up in any of these programs, and it's certainly a problem that all these communities and states are going to have to grapple with.
OK, so they have a problem. They've identified the problem. Are they taking any steps to fix it?
So, they are. There's actually a $500,000 budget earmark that is on Massachusetts Governor Baker's desk right now that would use taxpayer money to leverage more private funds for the program. And there's a caveat in this earmark that the money has to go towards outreach in underserved communities.
So, for example, this might be things like partnering with a community group that's already offering social services in a place like Chelsea or Springfield, and getting that group to talk about the program to help people sign up, to help people understand that this program's here, it's legitimate, you can get $50.
The state has been working on marketing in some of these communities, things like social media ads. It's been starting to create these enrollment hubs. So far there's one in Lawrence and Cambridge. They're working on ones in Springfield and Fall River, where you have a nonprofit that has a financial coach available, and they can literally sit down with a family and help them apply for the program.
