What if every child in Wisconsin was given a savings account that could be used for college or even their retirement one day? That’s what a new bipartisan bill in the Wisconsin State Legislature aims to do, with the goal of setting more Wisconsinites up for financial success and encouraging more students to go to college.
The bill would create a program called WisKids, which would set up a state-owned savings account that the state would seed with $25 for all children born or adopted in Wisconsin. Once the child turns 18, the money could be put towards post-secondary education, such as technical college, four-year college, or an apprenticeship program. Alternatively, when they turn 26, they could roll the money into a retirement account.
The accounts will inspire more residents to start saving, Democratic State Rep. Evan Goyke, who introduced the bill last month with Republican State Rep. John Macco, told the Wisconsin Independent, and will increase the likelihood of more students going to college.
“The power of this legislation is not the dollar amount saved. It’s the mindset that changes in a household,” Goyke said.
Goyke and Macco introduced a similar bill last year called 401Kids, which would have created a retirement savings account for all children in the state, but because of the complexities of retirement accounts, Goyke said they reimagined the proposal, which never got a vote in the Legislature, to create WisKids.
The WisKids program is partly modeled after the Pennsylvania Keystone Scholars program, which has set up accounts holding $100 for every child born or adopted since 2019 and is similar to Wisconsin’s existing 529 college savings program, called EdVest.
One difference, however, is that parents and individuals wouldn’t be able to contribute to WisKids accounts. The bill instead would allow charitable organizations and other groups to contribute to them. Groups could donate to all accounts in the state, to accounts in a specific city or community, or just to an individual’s account. Goyke said that WisKids would inspire more parents to open college savings accounts and expand the state’s EdVest program.
WisKids won’t require any additional money to be added to the next state budget. Instead, the money put into kids’ accounts would come from more than $20 million in fees previously collected by the state from EdVest accounts. Those fees stopped being collected in 2005 to reduce costs for investors, but the money that accumulated has yet to be spent and could fund WisKids for roughly 6-7 years. After that money runs out, proponents of the bill hope philanthropic contributions will sustain the program.
The savings accounts would be managed by the Wisconsin Department of Financial Institutions and the College Savings Board. Parents would get a notice about the program after their child is born or adopted, with a 30-day window to opt out of the account. If they don’t opt out, the account would be created and money deposited.
Goyke said he witnesses Wisconsin’s wealth disparities firsthand in his district in Milwaukee, which he described as split in half between wealthier suburban residents and low-income, urban and more diverse residents. He thinks WisKids could help bridge such gaps around the state by giving more residents tools for financial success.
“I live in a high-poverty neighborhood on the north side of Milwaukee. And, you know, for generations and generations we’ve seen this poverty get further and further entrenched,” Goyke said. “I see the opportunity to alter that trajectory through these universal accounts… especially communities like where I live and represent.”
Another of the goals of the program is to encourage more students to seek post-secondary education.
Establishing a college savings account for children significantly increases the likelihood that they’ll attend and graduate from college, according to a study cited by the bill’s authors. Having the account creates for both the student and the family the belief that the student can and will attend college, referred to as a college-bound identity. The study found that that belief can motivate families and children to take more proactive steps, such as reading more, participating in extracurricular activities, and taking advanced courses.
“More than the money, it’s the mindset of the family, that the young person, that the child is going to go, and the sky’s the limit, that there are no barriers to higher education because we put this money aside,” Goyke said.