New York City’s Child Savings Account initiative will provide families the opportunity to create a long-term savings plan for college, making higher education more accessible and achievable for all New York City public school students
Mayor Bill de Blasio, Commissioner Julie Menin, chair of the newly formed public-private partnership NYC Kids RISE, and the Gray Foundation’s Mindy and Jon Gray today announced the launch of NYC’s Child Savings Account (CSA) initiative, a new child savings account program to help thousands of New York City public school children save for college. The first phase will fund accounts for 10,000 children over three years.
“The steep cost of higher education has left too many New Yorkers unable to afford a college degree. Creating a savings account early in life dramatically increases the likelihood of a child going to college, so we’re going to help New York City families do just that. I am thrilled the City is partnering with NYC Kids RISE and the Gray Foundation to give New York City’s public school children a chance to obtain a college degree and reach their dreams. With this initiative, every child – regardless of their family’s economic status – will have a fighting chance to access higher education,” said Mayor Bill de Blasio.
“We need to invest in the future of our children. Research confirms that by creating these savings accounts, we will be dramatically increasing the chance that our children not only enroll in college, but graduate. Through this program they will see first-hand the benefits of long term savings, helping families to move up the economic ladder and enabling our students to secure their futures,” said Commissioner Julie Menin, who will serve as Chair of the public-private partnership NYC Kids RISE.
“We believe that all children should have an opportunity to reach their highest potential. By making college scholarship investments early in life, the New York City CSA initiative is sending the message to New York City public school students, their parents, their teachers, and their communities that they can pursue higher education and will be supported in realizing that goal. We are excited to help Mayor de Blasio and NYC Kids RISE pilot this impactful program,” said Jon Gray, co-Founder of the Gray Foundation.
With up to $10 million in seed funding contributed by the Gray Foundation, and working in collaboration with NY’s 529 College Savings Program, the CSA initiative will enable children to have access to financial resources to be used to obtain a post-secondary education. The initiative will encourage positive financial behaviors and life-long savings, through improved financial education and literacy, and will democratize the benefits of long-term investing.
The three-year pilot program will kick off in one City school district with approximately 3,500 kindergarteners in year one. Starting in fall 2017, kindergarteners in the participating school district will each start with $100 allocated to them in scholarship accounts, plus up to an additional $200 in matching funds during the program’s first three years. There is no cost to participate in the program, and all kindergarten students in that district will be automatically enrolled.
According to the Center for Social Development, a low- or moderate-income child with a college savings account of up to $500 is more than three times more likely to enroll in college than a child with no savings account. With savings of $500 or more, that same child is five times more likely to graduate from college than a child with no savings account.
"For even the brightest and best-prepared high school graduates, financial barriers too often place college beyond reach. That should never be the case, especially when our high school graduation rate is at an all-time high," said Richard Buery, Deputy Mayor for Strategic Policy Initiatives. "CSAs can be a powerful tool – not only for encouraging college saving, but for inspiring families to believe that college is in their future. This is a shining example of government and the private sector working together to put our children first."
“This groundbreaking public private partnership between the City of New York and the Gray Foundation will help to get our city’s kids on the right path by giving New York families a head start on saving for higher education. The de Blasio Administration wants every child to have the opportunity to succeed, regardless of their economic situation or their zip code. With the generosity of our partners in the private sector, I know we can give students the support they need to reach higher and stretch farther,” said Senior Advisor to the Mayor and Director of the Office of Strategic Partnerships Gabrielle Fialkoff.
“As the first person in my family to go to college, I understand the barriers that stand in the way of our low-income or first-generation students getting there and succeeding. This Administration has taken powerful steps to address those barriers, and the new Child Savings Accounts represent one more step in the right direction. I look forward to working with the Mayor and our partners as we build up this program and start our youngest learners on the path to college and careers,” said Schools Chancellor Carmen Fariña.
A top priority for the de Blasio Administration is to create equity and excellence in education for all of New York City’s children. This Administration is creating a path to college and careers starting with Pre-K for All – which is in its second year of providing every 4-year-old in the city with a free, full-day, high-quality pre-K seat – and continuing through elementary, middle, and high school. The City’s high school graduation rate is over 70 percent for the first time, the dropout rate is the lowest ever recorded, and college readiness and enrollment rates are also at record highs. As the City builds on this progress through the Mayor’s Equity and Excellence for All agenda – including the College Access for All initiative, which will provide every student with the awareness, resources, and support to graduate high school with an individual college and career plan – the child savings program will better prepare children to save for higher education options including college, vocational programs and other postsecondary educational options.
The project, led by Commissioner Julie Menin, is supported by several City agencies including the Department of Education, the Department of Information, Technology, and Telecommunications, the Department of Consumer Affairs, the Center for Economic Opportunity, and the Mayor’s Office of Media and Entertainment. In addition to their generous contribution of up to $10 million, the Gray Foundation has also played a leadership role in the development of the initiative. The Gray Foundation's gift will provide funding for a three-year pilot period as well as start-up funding for the CSA program’s infrastructure and personnel. Pending a successful pilot program and a fundraising campaign to raise the necessary private funding, the initiative will expand to fulfill its goal of providing a universal scholarship account to every child in the New York City public school system.
The City worked with leading social policy research firm MDRC to conduct six focus groups of 60 low- to moderate-income parents in New York City. MDRC found that while families care deeply about their children having the opportunity to go to college and were excited to learn about 529 accounts, almost no participants were previously aware of the tool. Further, the City conducted data analysis to determine that in NYC, a child growing up in a neighborhood in the top 20 percent of income is 20 times more likely to have a 529 College Savings Direct account than a child growing up in a neighborhood in the bottom 20 percent of income.
As part of the partnership, NYC Kids RISE will oversee the scholarship accounts and programs within the guidelines of NY’s 529 College Savings program. The nonprofit will function independent of the City and have a full-time Executive Director and a Board of Directors. The Board will have representation from both City Hall and the private sector, and will include Commissioner Julie Menin as Chair, NYC Schools Chancellor Carmen Fariña, Deputy Mayor for Strategic Policy Initiatives Richard Buery, and Executive Director of the Gray Foundation Dana Zucker. NYC Kids RISE plans to launch efforts to raise additional funds to support the ongoing costs of the initiative and to explore opportunities to scale. Commissioner Menin will assume the new responsibility of chairing the nonprofit, and continue in her role as Commissioner of the Mayor’s Office of Media and Entertainment.
The Department of Consumer Affairs and its Office of Financial Empowerment will also be involved with the initiative, utilizing its Financial Empowerment Centers to help families create their financial savings plans.
NY’s 529 College Savings programs are investment vehicles designated for saving for higher education. The CSA initiative will leverage the 529 platform and enable New York City students, regardless of circumstance, to take advantage of the benefits of investment and compounding growth.
The City worked to create an innovative account structure to enable all students entering participating schools to be in a position to benefit from the program’s philanthropic dollars. Under this structure, the funds invested in the scholarship component will be held in an omnibus account, and each participating student will be automatically assigned a portion of the total regardless of the families’ income or immigration status.
Through a unique hybrid structure, students will be able to participate in both a scholarship component and a family savings component of the program. Both the scholarship and family savings components will be invested in the 529 plan, so all funds will have the opportunity to benefit from compounding earnings. The family savings option will allow family members, relatives, and others to contribute to students’ education funds and have those funds be invested in a 529 plan.