Frequently Asked Questions
PA Treasury created the Keystone Scholars program with the purpose of providing a $100 grant at birth as a starter step to encourage all Pennsylvania families to plan for their children’s higher education. The grant money is dedicated for qualified expenses directly related to higher education, and families have until their child turns 29 years old to utilize the grant. The grant—and any college savings a family saves through PA529—can be used for any qualified higher education expenses at approved higher educational institutions; including trade schools, vocational programs, community colleges, and universities.
The demonstration project will be available for families residing in Delaware, Elk, Indiana, Luzerne, Mifflin, and Westmoreland counties. As part of that launch, $2.25 million has been raised privately that has been designated for any baby born or adopted in 2018 and 2019 to families living within the six-county area. All funds for the demonstration project are coming from philanthropic sources that include the PHEAA Board and the Neubauer Family Foundation.
The counties were chosen to represent the diversity of the commonwealth as a whole. Treasury used a variety of criteria in selecting the six counties. First, the demonstration project population needed to accurately reflect the population as a whole. At just under 14,000 births a year in the six counties, it represents about 10% of annual births statewide. It was also important to have a diverse geographic sample so the counties cover all four corners of the map. It also includes all kinds of communities: urban, rural, suburban. The counties also vary in terms of higher educational graduation rate, poverty rate, and PA 529 participation. Where Mifflin County is among the lowest statewide for higher educational attainment and 529 savings, Westmoreland County is a top performer for 529. Delaware County is home to both affluent Philadelphia suburbs and Chester, one of the poorest cities of its size in PA. The regional requirements of funders, some of whom have geographic restrictions on where they fund programs, were also taken into account.
This will allow Treasury to create scalable outreach and marketing programs, and gather data on outcomes and impacts. This demonstration project gives us a special opportunity to learn how better to engage the families who are not thinking about higher education for their newborn babies. If Treasury can learn how to communicate with them, how to engage them, how to turn their minds to a higher-education-bound mentality, it creates an opportunity to improve life for every Pennsylvanian. This program will also allow Treasury to help families who are ready to save optimize their behavior: start saving earlier and reap the maximum benefit from compound interest; save using an automatic deduction to a PA 529 plan to lower the barriers to saving as far as possible.
Bipartisan leaders in the General Assembly have been working with Treasury and will submit legislation that would make the Keystone Scholars program universally available to the nearly 140,000 children born or adopted in Pennsylvania each year. Unless parents opt out, each child will automatically have $100 invested for their future use for qualified higher education expenses.
The Treasury Department will administer the Keystone Scholars program through its PA 529 College Savings Program.
The earliest measurable impact is an improvement in maternal expectations, the first domino to fall in a chain of related events that lead to early educational outcomes including improved reading and math scores, later educational outcomes, and, eventually, increased rates of higher education enrollment and graduation. Children who had higher education savings at birth are three times more likely to enroll in an educational or training program after high school and are four times more likely to graduate. By changing parents’ early expectations for their child, CSAs create a pathway starting at birth and ending with educational success.
Nevada, Rhode Island, Connecticut, and Maine all have statewide higher educational savings plans like Keystone Scholars.
Absolutely. Pennsylvania families know that every dollar counts when it comes to paying for education. The $100 is meant to help families jumpstart their savings as soon as possible. If a family puts in just $25 per month starting when their child is born, by age 18 that would grow to approximately $10,000 (based on our investment assumptions).
Statewide, 7 percent of eligible households are savings for higher education using a PA 529 account. This is actually above the national average of 3 to 4 percent. But that’s not nearly enough to meet the needs that Pennsylvania families have in paying for post-secondary education, which is why we’re working to build a stronger program.
Like the four other states with similar universal programs, we won’t use general fund revenues. The demonstration project is privately funded through the generous support of key partners in the philanthropic community. The full program will use a modest portion of Treasury investment earnings in years when those are available, as well as possible fees and continued philanthropic support.
Pennsylvanians currently have the highest student loan debt load per person of any state in the nation. And many families find it hard to get started saving faced with their many other household expenses.
Our Commonwealth needs more families to know that there is a future for them after high school, whether that’s through vocational training, community college, or a university. And they need ways to save that are convenient, cost-effective, and that help jumpstart their future. That’s what Keystone Scholars is here to do.