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    Boosting College Savings Rates

    By Assemblymember Phil Ting–

    September is College Savings Month! To celebrate, ScholarShare529, a state-sponsored college savings plan, is offering a $100 bonus when you open an account by the end of this month with an initial deposit of $1,000 or more. Anyone can contribute thereafter. Watch earnings grow; then when it’s time, withdrawals for qualified higher education expenses are tax-free at both the federal and state level. 

    Why start? 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 another great program we just launched 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.

    College savings accounts will be automatically opened for all lower income students in California from 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 additional 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 the ScholarShare Investment Board, which is under the California State Treasurer’s Office, ensuring the seed money will safely grow.

    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 the student’s 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. The soonest dates include: October 6 and 20, from 11 am–noon PST. You can register through the CalKIDS website: https://calkids.org/

    While there are more than one hundred programs nationwide that open long-term savings accounts for children, California’s will be the largest. As Assembly Budget Chair, it’s exciting to think about our investment and the brighter futures that the CalKIDS program has the potential to bring. A degree or special career training can open so many doors, leading to good careers and upward mobility. Plus, an educated workforce helps the state’s economy thrive.

    Phil Ting represents the 19th Assembly District, which includes the Westside of San Francisco and portions of South San Francisco along with the communities of Broadmoor, Colma, and Daly City.

    Published on September 22, 2022