Legislature Considers Plan to Allow Municipalities to Open College Savings Accounts for Students

To improve the likelihood of low-income Connecticut youngsters graduating high school and entering college, a local resident has enlisted State Senator Dennis Bradley of Bridgeport to introduce legislation that would for the first time in state history permit municipalities to put seed money into specialized savings accounts, where the funds would accrue until they are used for college.

The proposal was subject of a public hearing by the legislature’s Committee on Children this month, garnering some support, a handful of questions, and no discernable opposition.

To help families save for college, the State of Connecticut has offered the Connecticut Higher Education Trust (CHET), Connecticut’s 529 College Savings Plan, for more than two decades.  States across the country offer similar plans. 529 plans are named after Section 529 of the Internal Revenue Code (IRC), which permitted states to establish the college savings plans.

A CHET account can be opened by any individual, including a grandparent, family friend or neighbor.  The proposed legislation, Senate Bill 651, would add municipalities to the list of entities that could open an account.

CHET is a tax-advantaged, low cost savings program specifically designed to help families save for future college costs. A CHET account may be opened with as little as $25, and contributions can be made using automatic deposit from checking or savings accounts or payroll deduction through participating employers. The funds can be used at accredited colleges and universities across the country, including vocational and technical schools, and some colleges abroad. 

The CHET program, under the jurisdiction of the State Treasurer’s Office, features state and federal tax free earnings and withdrawals on qualified higher education expenses. In addition, Connecticut families can take an income tax deduction (up to $5,000 for single filers, $10,000 for joint filers) on contributions to CHET accounts.

The leading advocate for the legislation is Frank Williams, whose career was in the financial industry as a bond attorney, and who more recently has served as the Chief Financial Officer and now Chief Executive Officer, of the Bridgeport Rescue Mission. 

He has also worked with World Vision International, as New York City Director and United Nations Representative, for an organization that serves as a “passionate voice for vulnerable children and communities to the diplomatic community.” His Linked In page notes that he has “been advocating for the poor in the Caribbean and Africa, from the podium at the United Nations, and now in Coastal Connecticut.”

Williams told the legislative committee, meeting via Zoom, that providing municipalities with the authority to establish 529 program savings accounts for students in their community “will encourage students and parents to dream bigger dreams,”  and “presents an incredible leverage opportunity” for the municipalities and the state.  Connecticut would be the first state to establish such a program.   Making young students of elementary school age aware of the growing savings account, he added, can encourage them to look ahead to preparing to attend college.  Letting them know “they have a fund already in place that will help them go to college,” is a “very exciting opportunity,” which he described as “part of distributing the future more evenly” across demographics.

He added that “one of the intended outcomes would be to increase high school graduation rates in Connecticut,” which he expressed confidence would be achieved. The program, if adopted and funded by municipalities would have “4th-5th-6th graders get excited about their future.” It could also increase the number of Connecticut students attending college, he predicted.

“Since 1997, CHET has helped more 57,000 students pay for higher education expenses,” State Treasurer Shawn Wooden told CT by the Numbers this week.  “Allowing municipalities the opportunity to open accounts for students within their school system would equip even more students in Connecticut with the tools they need to succeed. Whether it opens up the door for a student to be able to attend community college, vocational school, or a four-year university, it has the potential to change the trajectory of a child's life by allowing them to save for their future.”

Sen. Bradley described it as a “revolutionary idea,” which would permit – not mandate - municipalities to invest in CHET accounts for children in their communities.  Although not stated in the legislative proposal, the hope is that Connecticut’s cities – with children in families that often have less financial resources to provide a solid foundation for their future – would lead the way in utilizing the new authority.

Williams said a municipality could allocate a very small percentage of its budget to establish a CHET account for every child in their school system “to get them started - even if it is as little as 10 or 15 or 25 dollars a year.”  Parents and grandparents, and others, could contribute to a child’s account to help it grow.

Both Williams and Bradley said such a program could attract matching dollars from the private sector – business or philanthropic individuals or organizations – to help establish the program, and sustain it.

Possibilities mentioned during the hearing include Fidelity, a financial services firm based in Boston, which just this month began management of the CHET accounts, under contract to the State Treasurer’s Office.

Also providing testimony as part of the public hearing was Pastor William McCullough, Founder of FaithActs for Education, based in Bridgeport. McCullough is Senior Pastor of Russell Temple CME Church and President of the Interdenominational Ministerial Alliance of Greater Bridgeport.

McCullough said the proposed legislation would “provide a new and exciting vehicle for our children to achieve the dream of a college education.”  He cited it as an example of “what we can do together to strengthen educational opportunities for all children and most of all the low-income Black and Brown children who are too often left by the wayside when government policies are made.”

“It is yet another tool toward creating Education Justice in our state. It’s action and not just words. It’s not just slogans and hashtags, but laws that will liberate our children,” McCullough said.

“We’re blessed to give a few students small scholarships when they go off to college. Imagine if every congregation could begin to really invest in our children’s future. If those celebrations turned into actually rallying calls for the entire church to bless the child by investing in their higher education. That would be a game changer!”