By Catherine Brown, Senior Director, Policy and Advocacy
Reading time: Three minutes
In 2022, California created a new program called CalKIDS, the California Kids Investment and Development Program, which helps students from low-income backgrounds save for college or workforce training
programs. This program is designed to help families build wealth and put college within reach for all students, regardless of the challenges they have faced in life.
All babies born in California on or after July 1, 2022, and all students enrolled in California public schools identified as from low-income backgrounds (based on the local control funding formula)
on or after 2021 are eligible to receive up to $1,500 for each child to help put postsecondary education within reach. Newborns receive a one-time deposit of $100, parents who claim the account on the CalKIDS portal receive an additional $25, and
parents that link the account to their child’s ScholarShare 529 account receive another $50. Qualifying public school students receive $500 as an automatic benefit. Foster youth and students experiencing homelessness receive an additional $500, for
a total of $1,500 available.
The funds can be used at any eligible postsecondary education institution in California, including B.A.-granting colleges, community colleges, and career training programs. The funds may be spent on the full cost of attendance, including tuition and fees, room and board, books and supplies and technology. Once the funds are claimed, they are transferred directly to the institution of postsecondary education.
To get a sense of how much money this program can yield, consider the parent who registers an account for a newborn, links it to their child’s ScholarShare 529 account, and contributes just $20 a month to save for college. The original investment of $575
will grow to $4,679 by the time the child is 18, which is almost double the unmet financial need at a B.A.-granting public postsecondary institution nationally according to NCAN’s
annual Growing Gap analysis.
This approach could help address the racial wealth gap, which contributes to the racial gap in college completion. The typical white household had 9.2 times as much wealth as the typical Black household, according to the Pew Research Center, a direct result of the legacy of slavery and ongoing segregation.
Put differently, according to the Brookings Institute, “for every $100 held by white households, Black households
held only $15” in 2022.
The big challenge to the program’s efficacy in the two years since it was created has been low take-up. Only 300,000
of the 3.6 million eligible young people have claimed their accounts, leaving – as we like to say at the National College Attainment Network (NCAN) – millions of dollars on the table to help pay for college.
California has responded with enhanced marketing resources to help ensure that all eligible students understand the benefits
to which they are entitled. The state has allocated $22 million to raise awareness about the program through email, direct mail, and social media campaigns.
In Congress, Senator Bob Casey (D-PA) recently introduced the 401Kids Savings Act, and last year, Senator Cory Booker (D-NJ) introduced the American Opportunity Accounts Act, both aimed at creating a similar program to CalKIDS nationwide. Child Savings Accounts are also available statewide in six states beyond California: Illinois, Maine, Nevada, Nebraska, Pennsylvania, and Rhode Island.
Only time will tell if this burgeoning movement can achieve its lofty aims. With student debt at an all-time high and many students questioning the value of college, new approaches are needed to persuade students that postsecondary education will indeed
pay off.
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