Nearly 3.7 million students and 667,000 newborns in California have money invested in a savings account to help pay for college. But most families don’t know the money is there.
Citlali López, a sophomore psychology student at Sacramento State, discovered a few months ago that she had $500 in a California Child Investment and Development Savings Program (CalKIDS) account. Although he has been eligible to use the funds since graduating high school in 2022, he had no idea until his sister, who works at a nonprofit that supports low-income students with scholarships and financial aid, told him. He said to check his eligibility. Lopez was skeptical at first, but discovered she was eligible and registered her account.
“I was very surprised that I was able to get additional help,” she said.
Financial aid had been a priority for her and guided her decision to go to Sacramento State. She plans to use the money to finish general education classes over the summer if financial aid doesn’t cover it.
Citlali López is a sophomore at Sacramento State University and a recipient of the state CalKIDS program. May 9, 2024. (Miguel Gutiérrez Jr./CalMatters)
So who gets the money? According to CalKIDS, all babies born in California receive a sum. Babies born between July 1, 2022 and June 30, 2023 received $25 deposits, and all babies born after July 1, 2023 receive $100 deposits.
As part of the program, all low-income first-graders receive a one-time deposit of $500. First graders in foster care receive an additional $500 and homeless first graders receive $500 more, for a total of $1,500 for some students. All accounts are tax-free and money is invested whether families claim their accounts or not.
Additionally, the state spent $1.8 billion in the 2021-22 budget to provide a one-time deposit to all low-income students in grades 1-12 in 2022.
However, of the 4.3 million student accounts created, only 313,445 accounts have been claimed by families, meaning they have registered online and seen the amount in their accounts. As of March 2024, only 6.3% of newborn accounts and 7.4% of student accounts have been claimed.
The state is slowly raising awareness about saving for college.
CalKIDS is led by a three-person team led by Julio Martínez, executive director of the Scholarshare Investment Board, an agency within the State Treasurer’s Office. He manages the state’s 529 college savings accounts, which allow families to invest tax-free money to cover future education-related expenses. The team is responsible for creating the accounts, notifying families about the accounts, and explaining what CalKIDS can provide to families.
“With these programs, it takes time to build brand awareness and also break down the skepticism that often exists when you get a letter in the mail saying you have free money,” Martinez said. CalKIDS staff attend college fairs and financial aid nights and host online information sessions to reach families and students.
The state allocated $22 million (PDF) in the 2022 and 2023 budgets to market the program. In Los Angeles, Riverside, Fresno and Sonoma counties, information from the CalKIDS program is sent to all families who request a birth certificate, according to Joe DeAnda, communications director for the State Treasurer’s Office. During the first three months of this year, enrollment in the newborn program has more than doubled, from 20,608 to 42,312 newborns.
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