PROVIDENCE – A college savings program for Providence public school students has reached enrollment of 250 students, officials said.
The Providence Promise program, administered by a nonprofit of the same name, gives each student enrolled a 529 college savings account and makes them eligible for up to $20,000 a year in “gap funding.”
The money can pay for a higher education program of their choice, including two-year and four-year colleges and universities. It also can pay for trade and technical schools.
Under the program, families contribute about 1 percent of their household income to each student’s 529 account for 15 years. After graduating from a higher education program of their choice, students will contribute about 9 percent of their income for about 10 years.
The program began recruiting and enrolling local students last fall.
Cities, counties and states across the nation have joined the “Promise Movement,” program organizers said, to make postsecondary education accessible and affordable to more students.
A 529 plan, named after a section of the federal tax code, is a tax-advantaged investment vehicle designed to encourage savings for future higher education expenses. In addition to higher education costs, school tuition in kindergarten through grade 12 in public, private and religious schools was included as qualified expenses for 529 plans, with passage last year of the federal tax overhaul.
Nationwide, there are two types of 529 plans: prepaid plans and savings plans. Prepaid plans allow the purchase of tuition credits at current rates to be used in the future, with performance based on tuition inflation. Savings plans, on the other hand, are based on market performance of the underlying investments, which typically consist of mutual funds. The Providence Promise program is the latter.
Providence Mayor Jorge O. Elorza and R.I. Secretary of State Nellie M. Gorbea recently met at the Statehouse Library with families and others involved in Providence Promise to celebrate the milestone of enrolling 250 students.
“The rising cost of higher education requires families to begin planning before their child steps foot inside a classroom,” Elorza said. “I encourage all Providence families to spread the news about this program and enroll their children today.”
“As a mother of three young girls,” Gorbea said, “I understand the need to plan for the future. Families today need to start sooner than ever in preparing for their child’s education.”
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
