California will give kids free money for college as officials approved new state program

Josue Torres
(Canva Pro)

Every kid born in California on or after July 1, 2022, will be eligible to get a college savings account. All low-income children who attended a California public school in grades 1 through 12 last year or this year will be eligible to also get a bigger savings account.

CalKids, a state-funded program, claims to offer up to $100 for newborns and up to $1,500 for low-income children, although parents of newborns must go through additional hoops to receive the entire $100, and only a very small number of school-age students will be eligible for the whole $1,500.

The Scholarshare Investment Board, which is in charge of administering CalKids, says that having an investment or savings account specifically designated for college may have a good influence on the expectations of the kid and parents.

The program estimates it will enroll around 3.4 million school-age children and an additional 450,000 newborns yearly,.

A statute that permitted CalKids accounts for low-income children born on or after July 1, 2020, was in development since 2019. However, due to two pieces of legislation that significantly extended the program, implementation was delayed.

CalKids will be managed by the ScholarShare Investment Board, which is a division of the California Treasurer’s Office. Additionally, the board oversees ScholarShare, the state’s optional 529 college savings plan.

CalKids’ investment administration and marketing will be handled by the for-profit Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, the same organization that oversees ScholarShare.

The money will be kept in a state-owned omnibus account, which is a single account with separate accounts for each kid. Families are able to see their child’s seed money grow, but they are unable to withdraw it, put it to other uses, or give it to another person.

The state will transfer the kid’s money straight to his or her school for educational expenditures when the student enrolls in a four-year, community college, or technical/vocational 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 used to college expenses before the age of 26.
(Canva Pro)

The state believes the new initiative will inspire more parents to get a separate 529 account with ScholarShare on behalf of their children. Parents or other family members can do this. Although parents can link a CalKids account to a personal ScholarShare account for viewing reasons, the two accounts cannot ever be combined because of the different laws that apply to them.

In order to make deposits for low-income children enrolled in first through 12th grade in 2021–2022, the state set aside $1.9 billion in the budget from the previous year. $170 million was allocated in this year’s budget for kids starting first grade in 2022–2023. The infant accounts cost the state roughly $15.3 million a year.

For security reasons, if an email address is provided, at least one notice will be sent to each qualified student through email and regular mail. Officials stated that in order to spread the message, they want to work with trustworthy sources, including colleges, organizations, banks, and school administrators.

Here are some frequently asked questions regarding the program.

Who may apply for CalKids?

No matter the family’s financial situation or the location of the kid’s future school, the state will set up an account for every child born on or after July 1, 2022. No later than 90 days after their birth is recorded, the program gets data from the Department of Public Health. Parents will be informed when the accounts are created and the data is received.

A kid must satisfy at least one requirement under the Local Control Funding Formula to be eligible for a low-income school-age account. Students should generally be eligible if they are CalFresh, CalWorks, National School Lunch Program, Foster Youth, Homeless, Migrant Student, or English Learner recipients.

Based on a census conducted in October, the California Department of Education will give CalKids data on each qualified kid. The list of children who qualify won’t be made public until April of the following year since that is when the accounts will be established.

Regardless of immigration status, all accounts will be opened.

How is the CalKids account visible to parents?

The parent must register on the program’s website and enter the child’s birthday, county of residence, and the school district in order to see the account.

Parents must also input the Local Registration Number from the birth certificate or the number from the notification letter for newborns.

They must supply the student’s statewide student identification number or the code printed on the notification letter for school-age children. The SSID might be given by the child’s school or school district.
(Canva Pro)

How much will each CalKids account receive from the state?

The state will deposit $25 for infants. When the parent registers the account, it will deposit an additional $25, and if the parent ties it to an existing or new ScholarShare account, it will also deposit an additional $50.

The state will immediately deposit $500 for low-income kids, $500 more if they are foster adolescents, and $500 more if they are homeless. A student would need to be a low-income, homeless foster youngster in order to get the entire $1,500.

After the initial investment, will the state make any more deposits?

No. The grant is one-time only. As long as the state continues to make appropriations, monies will be distributed annually to cover children born that year and incoming low-income first graders.

Can parents make additions to their CalKids account?

No, however users may connect it to an existing or new ScholarShare account to access both accounts in a single location.

Can parents control the investments made with the money?

No. The money will be kept in a CalKids Scholarship account and invested in a TIAA-CREF insurance product with a guaranteed return of 1% to 3% annually for kids who were in grades 6 through 12 during the 2021–22 academic year. The sum will be handled as a tax-free scholarship when it is given to a school.

A growth-oriented age-based fund that becomes more conservative as children approach college age would hold money for younger children, including babies.

What happens if the kid leaves the state?

In order to receive distribution to a postsecondary school, the student must have resided in California for at least a year before that.

For additional information, parents can check CalKids’ website.

Comments / 7

Published by

Journalist. Covering relevant and meaningful everyday topics.

San Francisco, CA

More from Josue Torres

Comments / 0