AUGUSTA, Maine – Every child born in Maine will be eligible for a $500 college savings nest egg, thanks to the generosity of a shoe company founder who never attended college himself.
A foundation started by the late Harold Alfond, founder of Dexter Shoe Co., will give new parents an opportunity to sign up for a $500 down payment for their young son or daughter's college education.
The pilot program that kicks off on Jan. 1 through MaineGeneral hospitals in Augusta and Waterville will expand statewide in January 2009, officials said Tuesday.
Gov. John Baldacci called the Harold Alfond College Challenge "a first in the nation."
Since there are roughly 14,000 babies born each year in Maine, the foundation anticipates paying out about $7 million a year.
The program will be run through the quasi-state Finance Authority of Maine's NextGen program, which already provides one-time grants of $50 to start college savings.
Harold Alfond grants and their earnings can be used for courses at any accredited postsecondary school. The accounts must be opened before a child's first birthday. The money may be invested in a number of investment funds.
If the investment grows at rate of 8 percent per year, it would be worth about $2,000 in 18 years. But parents will be encouraged to add to the nest egg by donating $50 a month, which at the same interest rate would bump up the nest egg to about $25,000 by 2026.
If the money is not used for education, the initial $500 Alfond donation plus interest it accrues is returned to the foundation.
Alfond, who donated more than $100 million to Maine hospitals, colleges and charitable causes, had his sights set on helping families stymied by the high cost of colleges before he died last month at age 93.
In a tape of the philanthropist before his death, Alfond recalled help from others he received as a youth and said, "I always like helping others ... making sure everybody, especially children, have a chance in this world."
While Alfond did not attend college, he realized early on the lifetime benefits of a college education, said Baldaccci. "He will continue to reach out to help generations to come," the governor said.
Maine parents will be advised of the program largely through health care contacts and through life-skills classes in school, said Elizabeth Bordowitz, the finance authority's acting chief executive officer.
Similar but more limited programs have been tried elsewhere, but this is the first of such broad scope, said Bordowitz.
Chancellor Richard Pattenaude of the seven-campus University of Maine System said the new program "is stunning in its vision and its impact" and called it "a gift that will endure for generations."