Wednesday, June 12, 2024
HomeSchoolsCalifornia Kids Will Now Have a Savings Account for College

California Kids Will Now Have a Savings Account for College

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Children in California will receive free money for college in a savings account thanks to a new initiative by state lawmakers.

Under the California Kids Investment and Development Savings Program (CalKIDS), the state will create college saving accounts for children born to California families and qualifying low-income public school students. These accounts will include seed deposits and other incentives to pay for future higher education costs. 

Lawmakers hope that the savings accounts will inspire parents to contribute to their children’s futures as well.

According to Julio Martinez, executive director of the Scholarshare Investment Board in charge of managing CalKids, “Having an investment or savings account specifically designated for college can have a good effect on expectations of the child and parents.”

How the Program Works

No matter the family’s financial situation or the child’s future school location, the state will set up an account for every child born in or after July.

“We get data from the Department of Public Health no later than 90 days after their birth is registered. Once we get the data, the accounts will be created,” and parents will be notified, Martinez told San Francisco Chronicle.

Every child will receive a seed deposit of up to $100 once their account is created. Children in foster care will receive an additional $500, and low-income K–12 students will receive up to $1,500. 

Each child will have their own sub-account in an “omnibus” account, a single account held by the state where the money is kept. Families can track the growth of the account but cannot withdraw from it, put it to other uses, or give it to another person.

The state will transfer the child’s money straight to their school for educational expenses when they enroll in a four-year college, community college, or technical program. Neither the parent nor the child will owe taxes on the money. The money remains in the fund for future use if it is not applied to college expenses before age 26.

Click here to register a CalKIDS account.

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