Money for kindergarten children, which can be spent on college


It’s Friday. We’ll take a look at the college savings accounts that come with $ 100 for every kindergarten child at a public school in New York City – and why supporters say their value should be measured in more than just dollars.

Every kindergarten child at New York Public School got something new this year: a college savings account with a balance of $ 100. By the time high school graduation arrives in the 2030s, the average account is expected to be worth $ 3,000. It’s not enough to cover tuition fees, but research indicates other important benefits. Even a small amount in a dedicated college account seems to increase the chances that a student will stay in school and go to college.

I asked my colleague Tara Siegel Bernard, who as a personal finance reporter makes sense of everything from the federal debt ceiling to stimulus payments, to explain how these accounts will work.

How did you hear about the program?

I have attended a lot more PTA meetings than in the pre-pandemic days, as they are now held on Zoom. At our last meeting, the principal of our children’s elementary school mentioned that each kindergarten child would receive a $ 100 college savings account. As a financial reporter and mother of a kindergarten child, my ears pricked up – and I started reporting to find out more.

If I have a child at school, how can I access the account?

Your Kindergarten child will be automatically enrolled, but you won’t be able to activate the account until January. At the moment, the city is holding meetings to offer parents more informationn on the operation of the program – and it will soon offer the option to opt out.

But I don’t see any reason why anyone would want to do it. Free money is free money, although it is a small amount to start with.

And there is more than the initial $ 100. How much more, and what do children (or their parents) need to do to get it?

You can earn up to $ 200 in additional rewards.

So here’s how it will work: After the program launches in January, parents will be able to complete a series of steps, each of which will net $ 25 along the way.

Once you log in to Activate the account is $ 25. Open yours college savings account and link it to the program’s scholarship account, and your student will cash out an additional $ 25. To pay at least $ 5 on their own account? You got the idea.

After that, the students will be receive a dollar, up to $ 100, for every dollar their family saves in their own account, from grades 1 to 5.

How much can I save for my child? Is there a limit to the amount of my own money I can deposit? When can I withdraw money?

I wrote a comprehensive guide to college savings accounts. The TLDR version: if you open a college savings account, known as the 529 account, you can basically fund it as you wish, as there are usually no annual contribution limits for the 529s, although overall limits vary by state.

In New York, for example, you can contribute up to $ 520,000 (!) Per student. (This includes all New York State sponsored accounts for the same beneficiary.)

But contributions are considered gifts. This means that each parent can generally contribute up to $ 15,000 per year without any tax consequences. If you have deep pockets, Daddy Warbucks, you can contribute up to $ 75,000 in 2021 (double for married couples) if you use a strategy that treats it as a gift spread over five years.

You can withdraw money, tax free, once the student has eligible expenses to spend them. This includes college or vocational school tuition, books, and many other related costs. The 529 money can also be used to pay off student loans, thanks to a new law.

If I don’t deposit my own money, how much will be available when my child is of college age?

The nonprofit organization that runs the program, NYC Kids RISE, predicts that an average kindergarten child’s account could be worth around $ 3,000 by the time he or she graduates from high school. And it assumes an annual return of about 5 percent.

The final amount available really depends on the success of the program as everyone hopes. Students can potentially raise a lot of money through community scholarship campaigns. An excellent example was played in the pilot school district of Astoria in Queens. The association of tenants of a large social housing complex has raised $ 1,000 each for more than 100 elementary school students who live there. Some of these children now have accounts worth over $ 1,500.

By the way, the accounts were opened with $ 15 million from the city and $ 15 million from the Gray Foundation, a nonprofit started by Jon and Mindy Gray. (He is President and COO of Blackstone, the giant private equity firm; she was a writer at Ziff Davis Publishing and marketing manager at Edwin Schlossberg Inc.).

You wrote that this was the last government approval of accounts that put kids on the path to education beyond high school. Where else has it been tried and made a difference?

There have been over 100 programs introduced across the country, stretching from San Francisco to Maine.

The most dynamic are those that automatically enroll students – some when they are newborns, others when they start school. Pennsylvania, for example, has already provided more than 300,000 babies with $ 100 accounts since 2019.

Most programs are too new to know how much of a difference they will make – students have yet to reach high school. But there is a growing body of research that has shown that accounts can make a significant difference. One study found that even a small but dedicated account can make a child three or four times more likely to go to college.

What if someone doesn’t go to college and withdraw the money?

Let’s start by not going to college. If they do not use the money in their scholarship account within 20 years of leaving kindergarten – so around the age of 25 – it goes back to the program manager, who will use it to help out. other students.

The money can also be used for other eligible expenses, such as business schools or vocational training. So you don’t necessarily need to go to a traditional four-year college to benefit from it.


Savor what a mostly sunny day in the ’70s has to offer today before the showers and thunderstorms subside on the weekends. Tonight will bring mostly cloudy skies with temperatures in the mid-60s.

parking on the alternative side

In effect until November 1 (All Saints’ Day).

Dear Diary:

Stand up like a soldier
She serves
Blintz and stuffed cabbage
Our sealed lips
With fear
To walk on sacred ground.
“No”, she whispers,
The wrinkles on his forehead
Moving like gentle waves,
An ocean of old countries
Coming back
The speed of the hands,
The smell of food
Become an incense aroma
From inside the story
While the impatient honk
Urban traffic
Bring back the day.

– Kathryn Anne Sweeney-James

Illustrated by Agnès Lee. Read more about the metropolitan agenda here.

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