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With new tax credit, Oregon treasurer hopes to promote college savings for lower income families

Harmony Terry, a kindergartener at Scott Elementary School, holds a Be College Ready folder during a visit by Oregon Treasurer Tobias Read. (Rachel Alexander/Salem Reporter)

Saving for college is like planting pumpkin seeds in the garden, state Treasurer Tobias Read told a gathering of kindergarten students at Scott Elementary School.

Come harvest time, you end up with much more than what you put in.

“Saving and thinking about what you’re going to do in the long run – it’s a good thing to do,” he told the kindergarteners after reading them a book about a farmer who does just that.

Read was at the school last week as part of a bid to promote college saving accounts through the state’s Oregon College Savings Plan. Some 5,200 Marion County and 1,600 Polk County families currently have accounts.

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Oregon’s college accounts are 529 savings accounts, a special type for higher education expenses with federal and state tax benefits.

Those accounts can be used for many types of education, not just four-year colleges. Community college and trade schools are also eligible, and students can use funds to buy materials and books.

But despite their benefits, college savings accounts are typically established by wealthier families, in Oregon and across the U.S. A federal study in 2012 found a typical family with such an account earns three times what a family without an account does.

In Oregon, accounts are concentrated in urban counties, with big gaps between poorer and wealthier areas. Read and his staff want to change that.

In the spring, Oregon legislators passed a new law changing college savings contributions into a tax credit, rather than a deduction. Money that families would use to pay income tax can instead be saved for college, and families can now get some of their contributions back as a tax refund, with more money for lower income families.

Getting the word out to Oregon families is high on Read’s priority list.

State Treasurer Tobias Read talks to Scott Elementary kindergarten students about the importance of saving for college during a school visit on Sept. 19, 2019 (Rachel Alexander/Salem Reporter)

Earlier this year, his office launched a program called Kinder Grad to encourage new savings accounts for kindergarten students. Anyone opening such an account, which requires a minimum $25 contribution, will get a $25 match from the state within three months. The money isn’t funded by taxes – it’s part of the plan’s marketing budget, paid for with a small fee charged on accounts.

READ: Oregon wants to give you $25 to open a college savings account for your kindergartener

Read explained the plan to the Scott students.

“The state treasury will put $25 in your account,” he said. One girl near the front gasped.

His visit to Scott was part of a statewide marketing push to let more families know about their options for college savings. John Valley, outreach director for the Oregon Savings Network, has led that effort for several years.

He started doing in-person visits to PTA meetings and schools in cities across Oregon with lower enrollment, including Grants Pass and McMinnville.

“We saw a dramatic increase of new accounts being opened,” Valley said. Last year, the state took the program statewide.

Studies show that simply having an account, even with a small balance, makes students more likely to graduate high school and pursue further education.

This fall is the first where every kindergarten student in Oregon will take home a folder explaining the college savings plan. Read’s in-person visit was a Salem special, but Valley is traveling around Oregon to talk directly to parents about the plan and clear up misconceptions.

Many don’t realize the savings can be used for things other than four-year college, or that students don’t control the account, even if it’s in their name, Valley said.

Read passed out folders about the program to the kindergarteners, then moved to the school’s gym, where he explained compound interest to Scott’s fourth and fifth graders.

 “All of you have tremendous potential, and I think it’s part of my job to give you every advantage,” he said.

Reporter Rachel Alexander: [email protected] or 503-575-1241.

Rachel Alexander is Salem Reporter’s managing editor. She joined Salem Reporter when it was founded in 2018 and covers city news, education, nonprofits and a little bit of everything else. She’s been a journalist in Oregon and Washington for a decade. Outside of work, she’s a skater and board member with Salem’s Cherry City Roller Derby and can often be found with her nose buried in a book.