Yahoo Finance The college matched-savings program Congress wants to take national
In 2013, a program launched in Arizona offering a deal to those who were wavering as to whether college was financially out of reach for them.
In return for prospective students putting up to $500 of their own money into a savings account, the program offered an 8-to-1 match, giving them up to $4,000 per year.
“The combination of those savings dollars plus the $4,000 goes toward addressing unmet need for the students,” Kate Hoffman, CEO and founder of the program, told Yahoo Finance. “A program like Earn to Learn is really intended to prevent student loan debt in the first place.”
The program currently helps roughly 3,000 college students in Arizona. Eligibility is limited to Pell Grant-eligible students – those from families living at or below 200% of the Federal Poverty Level – and the grant money must be used for education-related expenses like tuition, books, or fees.
Students are also required to complete financial capability training and academic coaching to participate. Participants have a first-year retention rate approaching 90%, according to Earn to Learn, and the majority of program participants graduate with little or no student loan debt.
[Read more: The U.S. has already cancelled roughly $100 billion in student debt amid the pandemic]
Hoffman said the goal is to minimize loan borrowing “so that as they are getting ready to graduate, they have far less student loan debt than they would have had they not participated in the program.” Hoffman appeared as part of Yahoo Finance’s ongoing partnership with the Funding our Future campaign, a group of organizations advocating for increased retirement security for Americans.
‘We must do better’
Now Congress wants to take the program national. Kyrsten Sinema (D., Ariz.) and Sen. Mitt Romney (R., Utah) are pushing the Earn to Learn Act to push the savings program to low-income students nationwide.
If it becomes law, the new national program would have $100 million in funds over the next 5 years with the same rules nationwide as currently are in place in Arizona. The scholarships could be applied to any qualifying 2- or 4-year college or university. They estimate that somewhere around 250,000 students could take advantage.
“We must do better,” said Romney in introducing the bill. The legislation will “help students pursue their education by equipping them with the financial resources and knowledge they need to attend college, career, and technical schools without the burden of being saddled with debt when they graduate,” he said.
The bill faces uncertain prospects in a Washington but Sinema’s aides told the Arizona Republic they were optimistic it could be passed either on its own or as part of a larger bill.
“It sets the stage for us to take this to a level of scale across the country where we can really see the power of matched savings as a way to support college affordability,” Hoffman said.
According to a 2019 study by the National College Access Network, in 2016-17, just 48% of community colleges in a sample were affordable for the average Pell Grant recipient, while only 27% of 4-year public institutions were affordable.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.
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