New York City is giving every public school kindergartner $100 in a college savings account
Many parents dream about saving money for their children for college, but many are unable to make those dreams a reality. Thanks to a program New York City school district, led by non-profit NYC Kids Rise, started giving every kindergartner in the district $100 in a 529 college savings account in 2017. The plans are a tax-advantaged way to save for college or other schooling. Earnings and qualified withdrawals are free of federal tax and often state levies as well.
The program began in the district primarily because it is one of the most diverse in the city. More than half of the students are Hispanic, 23% are Asian, 16% are white and 7% are Black. About 20% of the students in the district are English language learners. Now this fall, every public school kindergarten student in New York City will get $100 in a 529 account according to CNBC.
“For New York to come back stronger than before the pandemic, we must address the widening wealth gap that holds so many kids back from opportunities,” New York Mayor Bill de Blasio said.
New York City committed $15 million per year through 2025 to the initiative, in addition to $15 million in funding from the nonprofit Gray Foundation. Along with the initial $100 deposit, students have the opportunity to earn an extra $200 in rewards.
The students get the accounts regardless of immigration status, because NYC Kids Rise owns the overall account that houses the individual student accounts, therefore, Social Security numbers aren’t needed.
New York City isn’t the first city to give students money for college savings accounts. San Francisco was the first in 2011, when it automatically opened an account with $50 for every child entering kindergarten in the public school system. Boston and Los Angeles are among those cities that also have programs, which include additional fundraising and rewards to build the balances.
In New York, the pilot program has already seen success in community fundraising. For example, a public housing complex in the district raised enough to give all kindergarten, first, second and third grade tenants $1,000 for their accounts according to the media outlet.
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