New York City funds college plans to close the wealth gap
Rukiya Zaman, 7, received $ 100 in a 529 scholarship savings plan as part of a New York City pilot program to close the wealth gap. Her parents have since started saving on their own.
Seven-year-old Rukiya Zaman dreams of becoming a NASA astronaut.
The second-grader, who was born in Bangladesh, is already saving to meet this goal, thanks to a program in her New York school district.
The initiative, led by a non-profit organization NYC Kids Rise, began giving every kindergarten child in the district $ 100 into a 529 college savings account in 2017. The plans are a tax-efficient way to save for college or other schooling. Qualifying earnings and withdrawals are exempt from federal tax and often also from state levies.
âThe first time I decided to go to space? Because I saw some pretty planets and wanted to touch them,â Zaman said.
The program was piloted in Zaman district mainly because it is one of the most diverse in the city. More than half of the students are Hispanic, 23% are Asian, 16% are white, and 7% are black. About 20% of the students in the district are English language learners.
Now, starting this fall, every kindergarten student at New York Public School will receive $ 100 into a 529 account.
“For New York to come back stronger than before the pandemic, we must close the growing wealth gap that is preventing so many children from having opportunities,” New York Mayor Bill de Blasio said at the meeting. ‘an event on Thursday launching the expanded program.
The city has committed $ 15 million annually through 2025 to the initiative, in addition to the nonprofit’s $ 15 million in funding. Gray Foundation. In addition to the initial deposit of $ 100, students have the opportunity to earn an additional $ 200 in rewards.
Students at New York’s PS 148, pictured in January 2020, were among those involved in a pilot program that gave a kindergarten student $ 100 as part of a $ 529 college savings plan. imitation is now city wide.
They get the accounts regardless of immigration status. This is because NYC Kids Rise owns the Global Account that houses the individual student accounts, so Social Security numbers are not required.
Admittedly, New York is not the first city to give money to students for college savings accounts.
San Francisco was the first. In 2011, he began automatically opening a $ 50 account for every child entering kindergarten in the public school system. Boston and Los Angeles are among the cities that also have programs, which include additional fundraisers and balancing rewards.
In New York, the pilot program has already had success in community fundraising. For example, a public housing complex in the neighborhood raised enough to give all kindergarten, first, second and third degree tenants $ 1,000 for their accounts.
Another big part of the initiative is financial education for families. The hope is that parents will be inspired to start saving in their own 529 plan.
Rukiya Zaman’s father, Rahimuzzaman Sumon, is among those who have opened an account. When he arrived in the United States in 2009, he only had $ 700 in his pocket. Now he is working hard to help his daughter achieve her goals, whatever they are.
“I can do anything for my child. I don’t want to buy a house,” he said. “I want [an] my child’s education. “
Watching the money grow in scholarship accounts can be empowering for parents, said Murray Abeles, chief administrative and financial officer at NYC Kids Rise.
âThe idea that you actually have assets there, before you even thought it was a possibility, is important,â Abeles said. “It becomes this kind of notion, ‘I can do this.'”
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He understands the importance of this access for the immigrant community. Abeles, whose mother is Colombian, is a district alumnus who piloted the program. He remembers when he was growing up his mother saved money by hiding dollars in a jar.
“She had no information on financial vehicles or other means of savings that could have helped her along the way,” he said.
NYC Kids Rise estimates that all in all, with additional community scholarships, family savings, and income on investments through grade 12, families will have saved $ 3,500 for education costs.