State-Sponsored Child Investment Accounts: Helping Parents Save for College, Helping Students Avoid Loan Debt

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December 22, 2021

Katy Clayton
Brian Backstrom


College tuition at public institutions across the country rose by 36.2 percent on average over the decade 2008-09 to 2018-19. The average total cost of college, accounting for all expenses such as room and board, across all institutions public and private grew by 22.4 percent. Students and their families are borrowing an enormous amount of money to pay for these costs: total student loan debt increased by 149.4 percent, from $577 billion to more than $1.4 trillion, over this same time period.

Many proposals to forgive existing student loan debt have been proposed and such policies were prominent components of campaign platforms among Democratic candidates for the 2020 presidential nomination. Indeed, in his first eight months in office, President Joe Biden cancelled approximately $9.5 billion in outstanding student loan debt for more than a half-million borrowers, including students who attended institutions engaged in fraudulent practices, certain members of the armed forces, and severely disabled borrowers. Additionally, President Biden’s administration simplified and expanded programs for student loan forgiveness, and paused interest accrual and repayments on federal student loans during the COVID-19 pandemic.

One of the surest ways to alleviate the burdens of student loan debt, however, is to avoid borrowing in the first place.

Sponsored Child Investment Accounts (SCIAs), a relatively recent state innovation spreading rapidly across the country with bipartisan support, incentivizes parents to save for college costs with dual goals of stimulating college going and preventing students from incurring untenable levels of loan debt. These state initiatives focus on distinct populations, are supported by assorted funding sources, were created by different legislative approaches, and follow various administrative practices. Examining the programs and their particular strengths offers New York State the opportunity to build on best practices to construct its own successful SCIA initiative.

Read the full report here.