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June 11, 2018
Commentary

Closing the skill gap by investing in education

Martha Johnston

Working together since 2008, the Alfond Scholarship Foundation and the Finance Authority of Maine are changing how Mainers plan and prepare for higher education.

The results may have far-reaching impact both for individuals — in developing their "college-going identity" and for Maine's future workforce — by increasing the number of higher education credentials in the workforce. The state is facing a crisis: employers across Maine face significant challenges finding suitable candidates to fill positions that require some form of education after high school. This shortfall of skilled workers can result in slow economic growth for the state.

Why is this important?

1. Maine will need 65,000-plus more educated workers by 2025. If Maine were to grow 65,000 more jobs, 60% of the workforce would need education beyond high school to meet future workforce demands.

2. Economic growth depends on a highly educated workforce. Instilling aspirations to higher education starts at an early age.

3. Having savings for education after high school increases aspirations and completion. Low and moderate- income children with college savings between $1 and $499 are three times more likely to attend to college, four times more likely to graduate.

4. Student debt limits graduates' job choice and their ability to launch a new business, buy a home, start a family and save for retirement.

How is Maine responding?

Maine is lucky. Since 2008, over $40 million has been invested by the Alfond Scholarship Foundation to fund the $500 Alfond Grant for more than 83,000 children.

FAME, the administrator of NextGen 529, then reaches out to those families with an Alfond Grant to encourage them to use the $500 Alfond Grant to open a NextGen 529 Account.

Once a child has a NextGen 529 account family and friends can invest in that child's future education by making contributions. To date almost 17,000 (47%) of those NextGen 529 accounts that have been opened with the Alfond Grant have received contributions totaling over $55 million. And it gets even better as FAME has invested $8.7 million in NextStep Matching grants to those NextGen 529 accounts with an Alfond Grant beneficiary.

Results

ASF and FAME are actively working in partnership on the following:

  • Encourage families with an Alfond Grant to use that grant to open a NextGen 529 Account
  • Encourage family savings for higher education
  • Increase family aspirations and support planning for higher education
  • Educate families on the benefits of saving for higher education to help reduce the need to borrow

Over 36% of all Maine children under the age of 18 have a $500 Alfond Grant and/or a NextGen 529 account. As of this February, nearly 36,000 (43%) of the Alfond grant recipients have had a NextGen 529 account opened on their behalf.

In addition, nearly 10,000 Maine children under 18 (not eligible for the Alfond Grant) have NextGen 529 accounts. Nearly all these accounts have received contributions, and many have also received matching grants. And NextGen 529 accounts are not just for children. More than 5,000 Maine adults have NextGen 529 accounts.

Visit InvestinME2030 for ways to get involved.

Martha H. Johnston, director of education for the Finance Authority of Maine, can be reached at mjohnston@famemaine.com

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