Education: San Francisco’s college savings program for kindergartners grows up

Written on: September 10th, 2023

A CNBC (1) post had me dig further into San Francisco’s college savings program. In 2011, San Francisco became the first city in the nation to start a college savings account for every kindergartener in the public school system. Those kindergarteners are now getting ready for college. This was a fantastic idea. I wondered why more cities and states didn’t help parents and students jump start their college savings.

Benefits of the program

• Key notes from the K2C program:

• Low- to moderate-income children with savings set aside for college are up to three times more likely to attend college and four times more likely to graduate from college than those without an account
• Only 54% of low-income students who are college-qualified enroll in college shortly after high school, as compared to 84% of high-income students.
• In national surveys about college savings, families with accounts had about 25 times the median financial assets of those without
• Children who graduate from college earn more money over the course of their lifetime than children who do not.
• K2C automatically opens a savings account seeded with $50 in public funds for every child entering kindergarten in SF’s public schools
• Seniors who’ve had the account since Kindergarten have an average balance of $1,422 — a 28 fold increase from the initial $50 deposit
• Half of the participating families qualify for free or reduced-price lunch
• Children’s Savings Account (CSA) are asset building accounts that provide a type of financial scaffolding for facilitating transfers of wealth from multiple sources to children for the purpose of giving all children an equal opportunity to reach their full potential
• San Francisco’s K2C program has been replicated across the country
• There are 128 active CSA programs reaching more than 5 million children in 38 states
• This includes municipal programs in Oakland, Los Angeles and New York City
• And statewide programs in California, Pennsylvania, Indiana and Maine
• College Savings are linked to increases in math scores among youth; better health and education outcomes; and the development of a “future orientation”
• In adulthood, people are more likely to save if they saved in childhood
• Programs like K2C can connect children to assets such as retirement accounts, real estate, and other investments
• College savings help children avoid student debt
• Indebted college graduates accumulate less wealth than graduates who never borrowed to finance their degrees
• K2C was structured as a scholarship, therefore according to the site, no federal, state, or local taxes are owed on the money granted

K2C inspired CalKids, to help children born in California starting on July 1, 2022 or later, or for eligible low-income public school students.

Some highlights:

• As of 2022, California enrolled 3.4 million children in CalKIDS (3) (4)
• When launched, the plan had more than $1.8 billion in assets
• CalKIDS will automatically open an account for each infant and deposit $25 in state funds as a seed
• An additional $25 is deposited if the beneficiary’s parents register online
• The initial deposit going to babies born after July 1, 2023 is now $100 thanks to increased funding from the state
• If a parent links the account to a Scholarshare 529 account the account can receive an additional $50
• CalKIDS School-Age channel automatically enrolled low-income school-age children with an initial deposit of $500 made automatically
• $500 is additionally deposited into the accounts of eligible students identified as foster youth
• A $500 additional deposit is made into the accounts of students identified as homeless, for a max total up to $1500
• Children can use assets in their CalKIDS accounts for specified higher education expenses at eligible institutions in the United States and abroad: trade or vocational schools, colleges, and universities eligible to participate in federal financial aid programs

These two initiatives show governments can care about people and work to solve long standing issues of educational and wealth inequality. Kudos to San Francisco and California for a wonderful idea wonderfully implemented. If the federal government and private industry came together for a similar federal program, we could ensure greater prosperity and opportunities for all children. Have you heard of governments around the world doing something similar? Please share in the comments below.

Over the coming decades this will lead to greater economic growth and reduced economic inequality in California. It requires foresight and action to invest in the future beyond any one politician’s term in office.

Here’s to automatic college saving for every child to reach their highest potential.

Sincerely yours,

smilingdad

Notes:

(1) CNBC In 2011, San Francisco opened savings accounts for kindergartners — now they’re going to be college freshmen https://www.cnbc.com/2023/09/09/san-francisco-k2c-savings-program-first-cohort-of-kids-goes-to-college.html

(2) sfgov.org Kindergarten to College https://sfgov.org/ofe/k2c

(3) CalKIDS https://calkids.org

(4) Center for Social Development California launches nation’s largest Child Development Account policy https://csd.wustl.edu/calkids-launches/