NationStates Jolt Archive

I hadn't heard about this legislation before yesterday, but apparently there is a bill in the House currently that will set up government sponsored "trust funds" for all children born after 2005. In summary, the American Savings for Personal Investment, Retirement and Education (ASPIRE) Act would create a savings account for all children born after 2005 containing a $500 starting balance (with an additional $500 added if the child is born into a family below the federal poverty level, for a total of $1,000 for poorer children). This savings account can not be touched by parents or the child until they turn eighteen, at which point they can use it for school tuition, buying a home or, eventually, retirment. Current numbers put the program at a cost of $3.25 billion the first year (2006) with a ten-year projected cost of $37.5 billion. While generally encouraging the program, some economists are suggesting that it isn't "lifechanging" and that even with at 18 year savings account, a $500 initial investment is going to little more than double and the actual buying power of that account will not be much greater than the initial investment.

There are several things I like about this program, and a couple of things that have me worried. On one hand, while it may not give a whole lot of money for higher education, it might start a lot more people at least thinking about college and savings plans and giving them somewhere to start. It also will help families that have entire "litters" of children deal with the costs of possibly sending them through school all at once. One of the advantages can also be seen as a drawback, though. While it might start people thinking about college and savings who traditionally haven't, it's not going to pay for the entire thing. While I have to admit that, had I had an extra thousand dollars or so when I started college, I would have finished paying off my loans by this point, but it certainly wouldn't have enabled me to go to college without my scholarships and loans. So, is this only pointless teasing? Also, is this a new type of account and what sort of protections are in place to make sure it only goes for these uses and not for a new car or an expensive vacation? Along that line, it's creation of a whole new program in an already bloated federal government structure. While it is important to encourage higher education, home ownership and retirement planning, is it really necessary to create an entirely new governmental system to do it when there are already programs and options in place designed for these purposes?

Does anyone know about this act or have answers to any of these questions? I really want to like this, but I'm not sure if this is the best way to go about accomplishing what it's trying to do.

It sounds intriguing. However, I suspect that $500 won't get you that far in the US college system, even after eighteen years or so. It would make a big difference in the UK though.

How would it work for people who defer their higher education? It's great to see a long-term project but what safeguards are in place to stop it being revoked or exploited ten or so years down the line?

It sounds intriguing. However, I suspect that $500 won't get you that far in the US college system, even after eighteen years or so. It would make a big difference in the UK though.

How would it work for people who defer their higher education? It's great to see a long-term project but what safeguards are in place to stop it being revoked or exploited ten or so years down the line?

Exactly. That's another concern. Simply because the US government says their going to do it and do it across the board, doesn't mean it gets done. I have no idea what safeguards are in place for keeping this from being another slush fund like Social Security, 10 years down the road or even the year it goes into effect. I also question the advisability and point of doing it across the board. Let's be frank. A child born to a family who's average income is over $100,000 a year is not going to need a $500 savings trust from the government for their college expenses whereas a child who's parents are below poverty level isn't going to be able to afford to go to college on just a $1,000 government trust. So why are we doing this at all when there are such obvious imbalances and it's ultimately either mostly irrelevant or simply not enough? Should there be a cut off limit to parental income and the amount of the government's initial deposit be determined by the parental income (higher amounts the lower the parental income)? Would the money be better spent going into already existant programs instead of creating an entirely new prong of government to oversee and implement this?

I agree wholeheartedly, though, that it's nice to see someone at least looking at a long-term solution. Hopefully this will become a trend in government.