New York City Mayor Bill de Blasio has made universal pre-K a cornerstone of his administration. He also wants to make sure those youth make it all the way through higher education. Starting next fall, the city will launch a three-year pilot program to create college savings accounts for thousands of New York City kindergartners in a bid to increase the number of low-income children who attend college, the New York Times reports.
Each year of the pilot, the families of about 3,500 children enrolled in public or charter schools will receive $100 in a 529 savings account created by the city. Families will be eligible for another $200 over four years if they meet certain benchmarks, like investing small amounts of their own.
The program is financed with a $10 million donation by Jon Gray, of investment firm Blackstone Group.
The accounts won’t pay an entire college tuition alone. Assuming a 4.5 percent annual return on the initial $100 and $200 in matching funds, the accounts will only be worth $475 after 12 years. But the program’s architects argue the goal is also psychological: encouraging parents to believe their children can go to college and to prepare for that future.
William Elliott, an associate professor and director of the Center on Assets, Education and Inclusion at the University of Kansas, told the Times, “If you have savings early on, you’re more likely to be connected to financial institutions later in life. You’re more likely to buy stocks, invest in real estate, buy a home, do the things that build assets.”
Child savings accounts programs are relatively new, but not untested. San Francisco has created a savings account for every kindergartner in the city’s public schools since 2012, and similar programs exist in Oakland and Boston. Research into the effects of Oklahoma’s program showed that infants selected to receive $1,000 in a 529 account performed better on a measure of socioemotional development at age 4 than similar children who did not receive it. Their mothers also fared better, showing fewer symptoms of depression than mothers of infants without savings accounts.
New York’s program will begin in one of the city’s 32 community school districts, but the city eventually hopes to expand to all of New York. Because the initial $100 will be deposited into an omnibus 529 account, immigrants without Social Security numbers or individual taxpayer identification numbers will also be able to participate.
Jen Kinney is a freelance writer and documentary photographer. Her work has also appeared in Philadelphia Magazine, High Country News online, and the Anchorage Press. She is currently a student of radio production at the Salt Institute of Documentary Studies. See her work at jakinney.com.