For these states and cities, funding college is money in the bank

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• Judy Woodruff:

  As we discussed with Senator Bernie Sanders, college debt is a huge problem in our country. Roughly two-thirds of students finish school owing nearly $30,000.

  Sanders is not alone in his call for free public college. Many of the 2020 presidential candidates have started laying out their own plans.

  As those ideas take shape, a number of states and cities are creating their own plans to provide grants and money for the very youngest to ensure that they can eventually go to college.

  Hari Sreenivasan has the story for tonight's Making the Grade. And it's part of a special series on Tuesdays this month about Rethinking College.

• Hari Sreenivasan:

  Just days' old, this newborn has already started saving for college. Under a new Pennsylvania program, every baby born or adopted in the state is given a college savings account with $100 in his or her name.

• Joe Torsella:

  That $100 is invested in our 529 account, and will grow over time.

• Hari Sreenivasan:

  So 140,000 kids a year are born in Pennsylvania?

• Joe Torsella:

  Yes.

• Hari Sreenivasan:

  The accounts are the brainchild of Pennsylvania State Treasurer Joe Torsella.

  The new program, called Keystone Scholars, is an effort to help future students cope with skyrocketing costs of college.

• Joe Torsella:

  Over roughly 30 years, the cost of higher ed has gone up in this country around 300 percent, while the median family income has basically not budged .

• Hari Sreenivasan:

  According to the Federal Reserve Bank of New York, Americans owe $1.46 trillion in student debt. Treasurer Torsella says Pennsylvania student debt burden is particularly troubling.

• Joe Torsella:

  I love my state. I'm a proud Pennsylvania. And I love it when I can say we're number one, except when the thing we're number one in is college debt. We currently lead the nation in that. Our average graduate has about $36,000.

• Hari Sreenivasan:

  Born January 18, Charlie Ross (ph) was one of the first babies to benefit from the statewide program.

  Kristin Dressler is Charlie's mom.

• Kristin Dressler:

  It was something I wish my parents had done for me when I was, like, a baby. And I think it's a really good idea.

• Hari Sreenivasan:

  Pennsylvania is betting that parents will be less likely to delay saving for college if accounts are automatically created at birth.

• Joe Torsella:

  There is a time when a child is born you always remember for the sense of magic and possibility. Life quickly takes over, with all kinds of demands.

  We wanted to do something at that moment when people are looking at their newborn or their newly adopted child, and they had the widest horizon and the widest sense of those possibilities.

• Hari Sreenivasan:

  Dressler took out a loan to pay for her first two years of college and will take out more to complete her degree. She wants an easier path for her son's education.

• Kristin Dressler:

  I'm hoping that he doesn't have to worry about that.

• Hari Sreenivasan:

  But if the average debt load in Pennsylvania for college graduates is $33,000, can $100 really make a difference?

• Joe Torsella:

  That $100 grows to $400. And if they deposit $25 a month from the time that child's born in an account with it, they will have more than $10,000 by that time that child reaches 18.

• Hari Sreenivasan:

  Pennsylvania's new accounts are funded through surplus earnings from the state's existing 529 college program.

  Like all 529 accounts, the money is earmarked for education. If an individual wants to use the funds for other purposes, they face tax consequences, and any money the state contributed is returned to a general fund.

  Pennsylvania is not alone. Plans to help families save for college are popping up across the country. In San Francisco, every child when they enter public school gets a new bank account with $50 in it. So far, they have opened more than 33,000 accounts in their kindergarten-to-college program.

• Joyce Melocoton:

  Are you guys excited for your field trip?

• Students:

  Yes!

• Joyce Melocoton:

  Where are we going again?

• Students:

  The bank.

• Hari Sreenivasan:

  At San Francisco's William Cobb Elementary School, teacher Joyce Melocoton prepares her kindergarten class for a field trip to the bank.

• Joyce Melocoton:

  We're going to the bank because you have to deposit money for what?

• Students:

  College.

• Joyce Melocoton:

  College. OK. And if you start saving now, then you will be ready for college.

• Hari Sreenivasan:

  On this day, kindergarten students were joined by San Francisco Treasurer Jose Cisneros at Citibank, a partner in the program.

• Jose Cisneros:

  We put $50 in your account. You already have money saved for your college education.

• Hari Sreenivasan:

  Fifty dollars is not much, but Treasurer Cisneros says creating an early perception about going to college is just as important as creating actual wealth.

• Jose Cisneros:

  What matters less is how much money is in the account and — or what the income of the family is. It's all about building aspirations in the student's mind and making sure they know this is an option that is available for them.

• Student:

  I would like to make a deposit.

• Jose Cisneros:

  To my college savings account.

• Student:

  To my college savings account.

• Jose Cisneros:

  You need to give her the money and the deposit ticket.

• Hari Sreenivasan:

  Half of San Francisco's public school students come from low-income families. And while all students receive an account, Cisneros hopes to engage families less likely to attend college.

• Jose Cisneros:

  Just engaging with that account, going to the bank, making deposits, talking about it at home, maybe talking about it with friends, sends a signal that says, oh, I have got a college savings account. Why? Because I'm going to college.

  And for many kids who don't have that in their childhood, that kind of conversation, that kind of influence, it turns out not being something they think is available to them.

• Hari Sreenivasan:

  But so far, only 20 percent of families in San Francisco have made additional deposits in their child's kindergarten-to-college accounts.

  Professor Brigitte Madrian is an expert on family savings and the dean of Brigham Young University Marriott School of Business.

• Brigitte Madrian:

  Parents who are actually contributing money is pretty low, so it's going to take more than just automatic.

• Hari Sreenivasan:

  Madrian says automatic savings accounts, set up for things like retirement, have been hugely successful when tied to payroll deductions. But she's less confident that automatic college accounts will be work when families are asked to make contributions on their own.

• Brigitte Madrian:

  Households have a lot of things for which they probably should be saving, and short-term financial needs may be taking precedence over longer-term needs, like saving for your children's college.

• Man:

  Can anybody say safe deposit box?

• Hari Sreenivasan:

  The annual cost of San Francisco's program is three quarters of a million dollars.

• Brigitte Madrian:

  Is it more cost-effective to direct those same financial resources that are coming from government to early kindergarten readiness programs, smaller class sizes in K-12? Which one gives you more bang for the buck I think is still a very open question.

• Hari Sreenivasan:

  As for the William Cobb Elementary students, the most popular future career cited on this field trip, superhero.

• Woman:

  So what do you want to be when you grow up?

• Student:

  A superhero.

• Hari Sreenivasan:

  Six-year-old Xavier Ochoa said he wants to be Batman when he grows up, but he also got the message of the day.

• Jose Cisneros:

  I would like to make a deposit.

• Xavier Ochoa:

  I would like to make a deposit.

• Jose Cisneros:

  In my college savings account.

• Xavier Ochoa:

  In my college savings account.

• Jose Cisneros:

  Here's your receipt. OK.

  Say thank you.

• Xavier Ochoa:

  Thank you.

  I want to get money for college, so I can learn more things, and so you can learn when you want to grow up.

• Hari Sreenivasan:

  For the "PBS NewsHour," I'm Hari Sreenivasan.