California’s College Savings Program Offers Money For All Kids, And Some 2022 Graduates Can Get It Now

California is jumpstarting college savings for every child born in the state with more money set aside for low-income students.

The CalKIDS program includes all babies born in California after July 1, 2022, as well as low-income students entering first grade this year and each year going forward. The state also extended the program to low-income students in first through 12th grade in the 2021-22 school year.

Most eligible students will receive $500, and there is an additional $500 each for foster and unhoused youth. There is a minimum of $25 in each account for newborns, and a maximum of $100. California invests that money, with the intention of growing it until the student is ready to use it to pay for tuition, books and other education expenses.

Several states — including Pennsylvania, Nebraska, and Maine — have similar programs, but California’s is now the largest in the country.

In Los Angeles County alone there are about 790,000 low-income students and more than 100,000 newborns are likely eligible for the program.

“What we're trying to do is just be proactive and help families save as much as they can and kind of avoid finding their, you know, themselves or their children in that situation where they owe a lot of money for their educational costs,” said Julio Martinez, the executive director of the ScholarShare Investment Board, which oversees CalKIDS.

Research shows children with savings accounts are six times more likely to attend college and graduate from a higher education program.

Between 12- and 13,000 Californians have already logged into their accounts at the end of August, including spring 2022 graduates who can use the new program to pay for their education this fall.

2022 High School Graduates Can Get Their Money Now

Cal State Dominguez Hills first year Tiffany Taylor had only recently returned to Twitter in August when she saw her former South L.A. classmates sharing the same tweet.

It promised easy money to help pay for college.

“What is this? Like, is it legit?” the soon-to-be criminal justice student wondered. “I want to know.”

Taylor messaged the original poster — @grannyrootie — who responded with step-by-step instructions on how to log into her account.

Within a few weeks, $500 was subtracted from her remaining $3,000 tuition balance.

“It's like a weight off my shoulder,” Taylor said. Now she’s paying it forward by sharing the information with friends.

“Granny” Ruth Navarrete, 22, is the woman behind the viral tweet.

“I feel like I was born to be a grandma, so I just call myself Granny Rootie,” she said. Her favorite “old lady hobbies” include sewing, crocheting and knitting.

Ruth Navarrete said students' access to everything from financial literacy to housing and transportation can impact their ability to attend college.

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The Long Beach City College student has worked in the college and career center at Lynwood’s Marco Antonio Firebaugh High School since she graduated in 2018.

Navarrete said she often talks to seniors who assume they won’t be able to pay for college before they even fill out a student loan application — and aren’t even aware of the application in the first place.

“Most of the time, they’re hearing this information for the first time ever,” Navarrete said.

She read about CalKIDS in a Los Angeles Times article. Navarrete registered accounts for her middle- and high-school aged sisters and texted her boss at the career center.

Since school hadn’t started yet, Navarrete turned to social media to get the word out. Her tweet has since been shared more than 3,000 times.

Taylor got into her dream school, Louisiana's Grambling State University, but ultimately chose Cal State Dominguez Hills because it was more affordable.

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The CalKIDS payout is one of several sources of money funding Taylor’s first year of school. Taylor said she’s also receiving a federal Pell Grant and a scholarship from a foundation named for former attorney and “Divorce Court” television judge Mablean Ephriam, an alum of her alma mater, Thomas Jefferson High School.

“If I didn't go to my college counselors and tell them, ‘OK I'm interested in this scholarship,’ or ‘what can I do to help me get this scholarship?’ I wouldn't be where I am right now,” Taylor said.

Both Navarrete and Taylor said they’re motivated by the idea that they can be a force for positive change in their community. Navarrete wants to earn a bachelor’s in sociology and maybe become a teacher or a counselor. Her dream school is the one Taylor currently attends.

“I could be, you know, like part of that support …that other students can now like, have and feel,” Navarrete said.

How Do I Get My Money?

Every child born in California after July 1, 2022 will have an account — though it takes a couple months after birth for the information to reach the CalKIDS program.

For school-aged kids to qualify, they need to be at least one of the following:

• Eligible to receive a free or reduced-price lunch 
• An English Language Learner 
• A migrant who switches schools during the school year
• Unhoused 
• A foster youth

Every eligible child is enrolled in the program automatically, but their parent or caregiver needs to register online to view and access the funding.

Students don’t have to use the money immediately after graduating. Their accounts are active and continue to grow until they turn 26 years old.

“We use the age of 26 because as you know, a lot of students follow non-traditional career paths [and] educational paths,” Martinez said.

What money isn’t claimed by then goes into funding new accounts.

Martinez said letters will go out to parents of newborn children and the ScholarShare Investment Board is reaching out to college financial aid offices to spread the word about the program.

Spokespeople for the Cal State and University of California systems said they plan to share information about the program to incoming freshmen and through campus financial aid offices.

“We want as many families as possible to become aware of this program and actually utilize it, and use these monies for their intended purpose,” Martinez said.

What Can I Do With The Money? What Can’t I Do?

While the accounts bear the names of the individual students, California controls the money until it's withdrawn. The state invests the money, with the goal of growing it over a child’s life. Martinez said the investment plans vary, but for example, sixth through 12th graders could expect to see their account grow between 1% and 3% every year.

When a student requests to have their money distributed, it goes straight to their chosen college. It can generally be used tax-free toward tuition and fees — the state says that includes books, supplies, and “equipment required for courses of instruction” — but it may be taxed if applied toward room and board.

Families can’t add more money to the CalKIDS account, but they can — and are encouraged to — also start another college savings account and manage the two accounts through the same website.

These accounts, called ScholarShare 529 plans, allow families, neighbors and friends to contribute money that is then invested and can be withdrawn — free from state and federal taxes — and used to pay for education-related expenses.

Historically, few families use 529 plans, and those that do are higher-income.

What We Know About How These Programs Impact Families

The idea of a program like CalKIDS, what researchers call a “child development account,” goes back to the 1990s.

Michael Sherraden, founding director of the Center for Social Development at Washington University in St. Louis, imagined “a policy that would begin with each child’s life at birth and build assets as they grow up.”

Unlike the 529 plans, which are only worth as much as families can afford, these programs ensure that every child receives some funding and that those who have less wealth, get more.

“Regardless of any other deposits, made or not made into these accounts, that money is working for the children's benefit,” said Margaret Clancy, the Center for Social Development’s policy director.

Navarrete registered accounts for her younger sisters and has already seen their investment grow about 50 cents since August.

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California’s program is based on what the Center considers best practices.

There’s still a lot we don’t know about the long-term outcomes of these programs, but WashU researchers have been checking with participants of an Oklahoma program for the last 15 years. Their findings show participating families saw improvements in several areas when compared to those that didn’t take part.

• Children showed better social and emotional development at age 5.
• In interviews, mothers expressed higher educational expectations for their kids and were less likely to have symptoms of depression.
• Every child participating had money set aside for college in an investment account while only 5% of non-participating kids did. The initial state investment of $1,000 grew to $2,300.

Among the early goals of CalKIDS, Martinez said, is that families, especially those in underserved communities, log into their accounts. The state will be looking at data like how many families open a 529 plan and deposit additional funds; where those families are located in the state; and what their background is.

“It's difficult to, at this point, determine whether we're succeeding or not,” Martinez said. “Long-term wise, we want to see if these programs actually impact or increase the number of students who actually go to college or pursue postsecondary education.”

Yicel Paez directs the L.A.-branch of the California Student Opportunity and Access Program, a state-funded organization that helps guide high school students through the financial aid application process.

She said most of the students they work with don’t have money saved for college.

She’s waiting on more information from the state, but said the information could be shared with the approximately 10,000 high school students they reach every year.

“I think for our students, anything — anything — helps,” Paez said.

The organization is also starting a newsletter to keep in touch with students now in college.

“It's not going to dramatically change your life or, like, your trajectory, but like, let's start a conversation about how we can build upon that,” Paez said.

What’s The History Of This Program?

It took years of advocacy and legislation to establish the CalKIDS program.

Glendale Unified School District Board of Education President Nayiri Nahabedian was an early advocate.

The Cal State Los Angeles lecturer first learned about child development accounts as a university student studying social welfare. She later introduced the idea to Van Nuys Assemblymember Adrin Nazarian.

“Taking the responsibility to start helping families build assets goes a long way toward helping them move away or out of poverty,” Nahabedian said.

The state budget passed in 2019 established the California Kids Investment and Development Savings Program. This iteration of CalKIDS promised $25 for every child born in the state.

While state leaders worked to establish a statewide program, there was a series of grants available to local governments, school districts and nonprofit organizations to fund college savings accounts.

Glendale Unified piloted a program in 2018 and has since expanded it, seeding accounts for every first grader with $100.

In a video promoting the program, young students talk about their dreams to become teachers, doctors, lawyers, astronauts, artists and Nobel-prize winners like physicist and chemist Marie Curie.

“Children form ideas about their futures very early in their lives,” Nahabedian said. “Let us be more intentional, and with great force, tell kids very early on that there are opportunities waiting for them.”