All families of low-income public school students – 3.4 million across the state – can now access college savings accounts created in their children’s names, with seed investments of between $500 and $1,500.
California launched the CalKIDS program on Wednesday. The largest college savings program in the country invests $1.9 billion into ScholarShare 529 college savings accounts for low-income children in grades one through 12, and for newborns born on or after July 1, 2022. For babies born after July 1, parents can register online.
Eligible low-income school children will automatically receive $500 to their accounts. The state will add $500 if the child is in foster care, and another $500 if they are experiencing homelessness, according to a news release from the Governor’s Office.
Eligible newborns will receive an automatic $25 deposit, and those who register on the programs online portal will receive an additional $25. Since this is a state program, parents cannot add to their child’s account, but linking a new or existing ScholarShare 529 accounts to CalKIDS will get another $50 deposit.
The California Department of Public Health and California Department of Education identify which children qualify. Enrollment in the program is automatic, but the state has not released income guidelines to describe eligibility.
“California is telling our students that we believe they’re college material – not only do we believe it, we’ll invest in them directly,” said Governor Newsom in a statement. “With up to $1,500, we’re transforming lives, generating college-going mindsets, and creating generational wealth for millions of Californians.”
The purpose of the nearly $2 billion program is to encourage more kids to continue their education after high school. At-17-years-old students can withdraw the money for college or a trade school, and funds can be used for tuition, books and other education-related expenses. The state does not have an estimate on how much money students may have upon withdrawing, because it depends on the market and how long the money stays in the account.
Funds must be used before a child turns 26 and will only be directly distributed to the college the child is attending, according to the CalKIDS website.
“I am proud and excited to finally see CalKIDS in action. My goal with this program was to bridge the gap between wealth inequality and the high cost of education,” said Assemblymember Adrin Nazarian.
Three pieces of information are required in order to access CalKIDS accounts: The student’s date of birth, school county and their statewide student identifier. Californians can access their accounts via the CalKIDS online portal now, but notification letters will be sent to qualifying children and families with more information in the coming months.