CA’s Seed Money for College
As the new school year begins, parents naturally look ahead and wonder about their kids’ educational future. Pursuing a degree is often at the top of the list because it can lead to good careers and upward mobility.
Research shows that children with a college savings account with $500 or less are three times more likely to enroll in college and nearly four times more likely to graduate than children with no savings.
With statistics like that, it’s easy to see motivation behind the launch of a new program called the California Kids Investment and Development Savings Program, or CalKIDS. It promotes the mindset – even the expectation – of going to college, while also helping families jumpstart college funds with seed money from last year’s and this year’s state budget, totaling more than $2 billion.
A college savings account will be automatically opened for all lower-income students in California, grades 1-12, and all newborns born on or after July 1, 2022.
The California Department of Education and the California Department of Public Health will identify the children who qualify, which may include families on CalFresh or CalWORKS. There is no need to apply, and no requirement that families make any kind of financial commitment. The state-funded, one-time deposits are as follows:
• Up to $1,500 for 3.4 million school-age children:
• $500 automatic deposit: Eligible lower income public school students in grades 1-12.
• $500 additional deposit: For foster youth.
• $500 sdditional deposit: For youth experiencing homelessness.
• Up to $100 for newborn children, regardless of income:
• $25 automatic deposit: Every eligible child born on or after July 1, 2022.
• $25 additional deposit: Those who register on the program’s online portal.
• $50 additional deposit: Those who link a new or existing ScholarShare 529 account to the CalKIDS account.
While people cannot directly add money to a CalKIDS account, they can open a ScholarShare 529 college savings account to make their own deposits, then link the CalKIDS account to it. CalKIDS is managed by ScholarShare Investment Board, which is under the California State Treasurer’s Office, ensuring the seed money will safely grow, tax free.
When the child enrolls in a four-year or community college, or a technical/vocational program, the state will send the money directly to eligible schools across the country and even some abroad for his or her educational expenses, like tuition, books, computer equipment, supplies and more. The student must live in California for at least one year immediately preceding a distribution to a postsecondary institution. If the money is not used for college before the age of 26, the money stays in the fund for others to use.
I encourage you to register for a webinar to find out more about this new program. So far, dates are Sept. 8 and 22, and Oct. 6 and 20, from 11 a.m. – noon PST. You can register through the CalKIDS website: https://calkids.org/.
While there are more than 100 programs nationwide that open long-term savings accounts for children, California’s will be the largest. It’s exciting to think about our investment and the brighter futures that CalKIDS has the potential to bring. A degree or special career training can open so many doors. Plus, an educated workforce helps the state’s economy thrive.
Phil Ting represents the 19th Assembly District, which includes the west side of San Francisco along with the communities of Broadmoor, Colma, and Daly City as well as part of South San Francisco.