Thousands of city children in kindergarten in northwest Queens will soon get a head start in saving for college through a new initiative by Mayor Bill de Blasio's administration. NY1's Lindsey Christ filed the following report.
Some 4-year-olds in city pre-k classes will soon have their savings accounts for college.
The city plans to create the so-called 529 accounts for 10,000 kindergarten students over three years in District 30, which includes Astoria, Long Island City and Sunnyside.
"The research shows that a low-income child that has a college savings account between $1 and $499 is three times more likely to go to college than a child who does not have a college savings account," said Julie Menin, the city's commissioner of media and entertainment.
Each account will start with $100. Students can earn another 200 through incentives, such as good attendance.
Using the 529 account provides certain tax advantanges.
"Just the mere existence of these college savings accounts and the fact that someone is saying, 'We believe in you and we are investing in your future,' is incredibly important," Menin said.
Jonathan Gray, the head of real estate for the asset management firm Blackstone, and his wife Mindy donated $10 million to fund the accounts.
Wealthier families are more likely to create the accounts. The goal here is to get other families to do the same.
"We could democratize 529 accounts to provide tax-free saving for education and allow all families to receive the benefits of long-term investing," Gray said.
City officials say they only wanted to launch the program if it could include all students in a particular district, but students who are undocumented usually can't open 529 college savings plans, which require a social security number. Eventually, a team of lawyers was able to figure out a way around that issue.
A new nonprofit will run the program and try to expand it.
The announcement comes days after de Blasio's rival, Governor Andrew Cuomo, proposed a more robust college aid program. He wants free tuition in the city and state university systems for low- and middle-income students.
City officials say the savings accounts would still be relevant, since the money can be used for expenses beyond tuition, like room and board, books or computers.