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Babies in Pennsylvania will be getting a leg-up on higher education courtesy of the state.
The state Treasury Department is creating a $100 college or technical school savings account for all Pennsylvanians born on or after Jan. 1.
It’s all part of The Keystone Scholars Program that became law in June.
Under the law, the state Department of Health will notify the state Treasury Department of a birth within 90 days. The Treasury then will inform parents about the program. Parents have the option of excluding their child from the program.
By age 18, the first $100 is expected to grow to $211 based on Treasury’s formula of a 4.25 percent annual compound interest.
The money will be saved at the Treasury in a PA 529 account. Parents can start their own 529 account for their children, which would be linked to the Keystone Scholars account.
Treasury spokeswoman Ashley Duross has said putting $25 into their own account every month would yield up to $10,000 by the age of 18.
Funding for the Keystone Scholars program will come from investment earnings within the PA 529 College Savings Program, and not from taxpayers, the Treasury Department said.
The account that will fund Keystone Scholars is funded at 117 percent, and that surplus reserved for the program. Philanthropic donations may also fund the program.
The money is the student’s as long as it is applied to post-secondary education.
Post-secondary education can include public or private universities, community colleges, vocational or technical schools. Possible expenses can be for tuition, fees or books.
If the student doesn’t pursue post-secondary education, the money is forfeited and remains in the fund for others.
Pennsylvania ranks No. 1 in college debt per student, at $35,000. That was one of a number of reasons Sen. John Gordner, R-Columbia, sponsored the legislation, which was spearheaded by state Treasurer Joseph Torsella.
“Hopefully, it will spur that family — whether it’s the parents or grandparents, uncles, aunts — to put some additional money into that account,” Gordner said when the law was passed. “It’s meant really to be a seed.”