Starting in September, every District 30 student in 29 elementary schools and five charter schools will automatically receive $100 in a scholarship account in their name that will be invested into the state’s 529 College Savings Program.
Students are then eligible for up to $200 in matching funds in the next three years, based on criteria including attendance rates.
The scholarship money will be “held in a lockbox” until they graduate. Students can then use it for post-secondary education expenses, such as tuition, books, room and board, or computers.
“We are well on our way to helping New York City children save for college,” said Julie Menin, commissioner of the Mayor's Office of Media and Entertainment.
Menin will chair the new nonprofit NYC Kids RISE, which will run and manage the program.
Officials expect approximately 10,000 students to participate in the pilot program during the three-year test run. The goal is to eventually expand the program citywide.
“We want to be able to knock it out of the park in District 30, so we ask for everyone’s help in doing that,” Menin said. “Our goal is to expand it citywide because we think it’ll be an incredibly game-changing program.”
Families of District 30, which includes Astoria, Long Island City, Sunnyside, Woodside, Jackson Heights and East Elmhurst, can take advantage of the program for free, regardless of immigration status.
The new initiative will also encourage families to open up their own separate 529 accounts, where relatives, friends and neighbors can contribute to a child’s savings account for college.
Just three days before the announcement, Governor Andrew Cuomo proposed free tuition to state colleges for middle to low-income families. Officials said the savings account program will be “complimentary” to that proposal because it will help pay for the other expenses involved with education.
“Many studies show the reason that some young people are not going to college is because of those additional expenses,” Menin said. “This money can be used at any college, not just CUNY or SUNY.”
Menin joined Chancellor Carmen Farina and Deputy Mayor Richard Buery at PS 171 in Astoria last week to make the announcement. The commissioner noted that, according to studies, students who have between $1 and $499 in college savings are three times more likely to go to college.
Once they’re in college, a student with a savings account is five times more likely to graduate than a student with no account, Menin said.
In New York City, children in the top 20 percent income bracket are 20 times more likely to have a 529 account than a child in the bottom 20 percent, she added.
Farina has three 529 accounts, one for each of her grandchildren. She started them immediately when they were born.
“It’s something I didn’t give a second thought to,” Farina said. “It was automatic that I should do this for my grandchildren.”
The chancellor said this program will also be an opportunity for parent education and increased financial literacy.
“I know from my own life that that is something we have to put on the table and make sure parents understand that nothing should hold them back,” said Farina, who was the first in her family to go to college.
Buery said the program will have a “deep, compelling and demonstrable impact” on the future of the city.
“This project, for me, is at the heart of everything we do as a city,” he said. “It is about the American Dream, the idea that anyone can do anything, anyone can accomplish anything.”
Buery said he believes even having a modest savings account will help change a family’s behavior to be more mindful of saving for college.
“We know that once a family has a savings account, it begins to affect the culture of the family,” Buery said. “Once you start to save for college, once you have that real thing that is directed toward getting your child into college, you start thinking about what else I should be doing to get my child into college.
“It’s not just about the money, it’s also about educating families and creating a college-bound culture,” he added. “All of those things help people on a path to college.”
NYC Kids RISE will receive $10 million in seed funding from the Gray Foundation, which is headed by Jonathan Gray, the global head of real estate for the private equity group Blackstone. The money will also help with start-up funding for the nonprofit’s infrastructure and personnel.
It will be run by Debra-Ellen Glickstein, who was previously executive director for NYC’s Office of Financial Empowerment.
Gray believes the program will achieve multiple goals at once, such as encourage long-term savings, help with financial literacy for students and parents, democratize tax-free 529 savings accounts and, most importantly, increase the likelihood of college or vocational school enrollment.
“The research shows that if you save, you’re much more likely to achieve this goal,” he said.
Gray said he and the city insisted on “critical requirements” to set the program up. He wanted the program to be available for all students, including undocumented kids, and it had to “facilitate and incentivize savings” for college.
“We have to make sure students and families here in District 30 participate by opening up their own 529 account and then making deposits,” Gray said. “We have much work to do to roll this out broadly throughout the entire city.”