North Dakota Announces Accounts-at-Birth Program for College

Following in the footsteps of Maine, Rhode Island, San Francisco, and others, North Dakota launched a new initiative Wednesday -- what's being called the Children FIRST program -- that provides college savings accounts at birth. Every newborn in the state will now be eligible for a $100 grant, and as is the case with Maine's Harold Alfond Challenge, the child must be signed up before his or her first birthday.

Unlike Maine's program (which offers $500 at birth) however, North Dakota requires that the initial $100 be matched within four years by the family or another private source. The Bank of North Dakota, which is the only state-owned bank in the U.S., will oversee the program and finance the grants.

To note: North Dakota is also one of ten states whose 529 college savings plan currently provides matching grants to low- and moderate-income families. 

The state issues a one-time grant of up to $300 for families with incomes of $40,000 or lower ($80,000 for married couples), and up-to-three-year matching grants for families with incomes of $20,000 or below ($40,000 if married). Low-income families in particular stand to reap these incentives, and conceivably could accumulate nearly $2,000 in three years by only putting in $900 of their own money.

The state would do well to heed the lessons from Maine's Harold Alfond Challenge, which has seen enrollment in their plan teeter around 40% of all eligible savers, possibly due to the requirement that children be signed up in year one. Automatic enrollment, of course, can be a powerful tool in ensuring universal participation, particularly for low-income households. San Francisco's Kindergarten-to-College program, for example, has begun to do just that.

Regardless, this is a broadly positive development that could act as an incubator for a future federal child savings account policy.