November 22, 2016
New York City’s Child Savings Account initiative will provide families the opportunity to create a long-term savings plan for college, making higher education more accessible and achievable for all New York City public school students
NEW YORK—Mayor Bill de Blasio, Commissioner Julie Menin, chair of the newly formed public-private partnership NYC Kids RISE, and the Gray Foundation’s Mindy and Jon Gray today announced the launch of NYC’s Child Savings Account (CSA) initiative, a new child savings account program to help thousands of New York City public school children save for college. The first phase will fund accounts for 10,000 children over three years.
“The steep cost of higher education has left too many New Yorkers unable to afford a college degree. Creating a savings account early in life dramatically increases the likelihood of a child going to college, so we’re going to help New York City families do just that. I am thrilled the City is partnering with NYC Kids RISE and the Gray Foundation to give New York City’s public school children a chance to obtain a college degree and reach their dreams. With this initiative, every child – regardless of their family’s economic status – will have a fighting chance to access higher education,” said Mayor Bill de Blasio.
“We need to invest in the future of our children. Research confirms that by creating these savings accounts, we will be dramatically increasing the chance that our children not only enroll in college, but graduate. Through this program they will see first-hand the benefits of long term savings, helping families to move up the economic ladder and enabling our students to secure their futures,” said Commissioner Julie Menin, who will serve as Chair of the public-private partnership NYC Kids RISE.
“We believe that all children should have an opportunity to reach their highest potential. By making college scholarship investments early in life, the New York City CSA initiative is sending the message to New York City public school students, their parents, their teachers, and their communities that they can pursue higher education and will be supported in realizing that goal. We are excited to help Mayor de Blasio and NYC Kids RISE pilot this impactful program,” said Jon Gray, co-Founder of the Gray Foundation.
With up to $10 million in seed funding contributed by the Gray Foundation, and working in collaboration with NY’s 529 College Savings Program, the CSA initiative will enable children to have access to financial resources to be used to obtain a post-secondary education. The initiative will encourage positive financial behaviors and life-long savings, through improved financial education and literacy, and will democratize the benefits of long-term investing.
The three-year pilot program will kick off in one City school district with approximately 3,500 kindergarteners in year one. Starting in fall 2017, kindergarteners in the participating school district will each start with $100 allocated to them in scholarship accounts, plus up to an additional $200 in matching funds during the program’s first three years. There is no cost to participate in the program, and all kindergarten students in that district will be automatically enrolled.
According to the Center for Social Development, a low- or moderate-income child with a college savings account of up to $500 is more than three times more likely to enroll in college than a child with no savings account. With savings of $500 or more, that same child is five times more likely to graduate from college than a child with no savings account.
"For even the brightest and best-prepared high school graduates, financial barriers too often place college beyond reach. That should never be the case, especially when our high school graduation rate is at an all-time high," said Richard Buery, Deputy Mayor for Strategic Policy Initiatives. "CSAs can be a powerful tool – not only for encouraging college saving, but for inspiring families to believe that college is in their future. This is a shining example of government and the private sector working together to put our children first."
“This groundbreaking public private partnership between the City of New York and the Gray Foundation will help to get our city’s kids on the right path by giving New York families a head start on saving for higher education. The de Blasio Administration wants every child to have the opportunity to succeed, regardless of their economic situation or their zip code. With the generosity of our partners in the private sector, I know we can give students the support they need to reach higher and stretch farther,” said Senior Advisor to the Mayor and Director of the Office of Strategic Partnerships Gabrielle Fialkoff.
“As the first person in my family to go to college, I understand the barriers that stand in the way of our low-income or first-generation students getting there and succeeding. This Administration has taken powerful steps to address those barriers, and the new Child Savings Accounts represent one more step in the right direction. I look forward to working with the Mayor and our partners as we build up this program and start our youngest learners on the path to college and careers,” said Schools Chancellor Carmen Fariña.
A top priority for the de Blasio Administration is to create equity and excellence in education for all of New York City’s children. This Administration is creating a path to college and careers starting with Pre-K for All – which is in its second year of providing every 4-year-old in the city with a free, full-day, high-quality pre-K seat – and continuing through elementary, middle, and high school. The City’s high school graduation rate is over 70 percent for the first time, the dropout rate is the lowest ever recorded, and college readiness and enrollment rates are also at record highs. As the City builds on this progress through the Mayor’s Equity and Excellence for All agenda – including the College Access for All initiative, which will provide every student with the awareness, resources, and support to graduate high school with an individual college and career plan – the child savings program will better prepare children to save for higher education options including college, vocational programs and other postsecondary educational options.
The project, led by Commissioner Julie Menin, is supported by several City agencies including the Department of Education, the Department of Information, Technology, and Telecommunications, the Department of Consumer Affairs, the Center for Economic Opportunity, and the Mayor’s Office of Media and Entertainment. In addition to their generous contribution of up to $10 million, the Gray Foundation has also played a leadership role in the development of the initiative. The Gray Foundation's gift will provide funding for a three-year pilot period as well as start-up funding for the CSA program’s infrastructure and personnel. Pending a successful pilot program and a fundraising campaign to raise the necessary private funding, the initiative will expand to fulfill its goal of providing a universal scholarship account to every child in the New York City public school system.
The City worked with leading social policy research firm MDRC to conduct six focus groups of 60 low- to moderate-income parents in New York City. MDRC found that while families care deeply about their children having the opportunity to go to college and were excited to learn about 529 accounts, almost no participants were previously aware of the tool. Further, the City conducted data analysis to determine that in NYC, a child growing up in a neighborhood in the top 20 percent of income is 20 times more likely to have a 529 College Savings Direct account than a child growing up in a neighborhood in the bottom 20 percent of income.
As part of the partnership, NYC Kids RISE will oversee the scholarship accounts and programs within the guidelines of NY’s 529 College Savings program. The nonprofit will function independent of the City and have a full-time Executive Director and a Board of Directors. The Board will have representation from both City Hall and the private sector, and will include Commissioner Julie Menin as Chair, NYC Schools Chancellor Carmen Fariña, Deputy Mayor for Strategic Policy Initiatives Richard Buery, and Executive Director of the Gray Foundation Dana Zucker. NYC Kids RISE plans to launch efforts to raise additional funds to support the ongoing costs of the initiative and to explore opportunities to scale. Commissioner Menin will assume the new responsibility of chairing the nonprofit, and continue in her role as Commissioner of the Mayor’s Office of Media and Entertainment.
The Department of Consumer Affairs and its Office of Financial Empowerment will also be involved with the initiative, utilizing its Financial Empowerment Centers to help families create their financial savings plans.
NY’s 529 College Savings programs are investment vehicles designated for saving for higher education. The CSA initiative will leverage the 529 platform and enable New York City students, regardless of circumstance, to take advantage of the benefits of investment and compounding growth.
The City worked to create an innovative account structure to enable all students entering participating schools to be in a position to benefit from the program’s philanthropic dollars. Under this structure, the funds invested in the scholarship component will be held in an omnibus account, and each participating student will be automatically assigned a portion of the total regardless of the families’ income or immigration status.
Through a unique hybrid structure, students will be able to participate in both a scholarship component and a family savings component of the program. Both the scholarship and family savings components will be invested in the 529 plan, so all funds will have the opportunity to benefit from compounding earnings. The family savings option will allow family members, relatives, and others to contribute to students’ education funds and have those funds be invested in a 529 plan.
"We must do everything in our means to ensure equitable opportunities for all NYC's children and the City's Child Savings Account initiative does just that," said Department of Information Technology and Telecommunications Commissioner Anne Roest. ''Our agency is honored to be a partner in this very important endeavor and we are proud to be providing the technology behind this initiative to further Mayor de Blasio's vision for a just and equitable city."
“Child savings accounts create the foundation for our public school students to plan for and complete post-secondary education, which increases the equality of opportunity,” said Department of Consumer Affairs Commissioner Lorelei Salas. “By fostering savings starting in kindergarten, not only will our kids be exposed to and develop savings habits, but they will be better prepared to plan for their college education.”
"The 529 Savings Plan helps build a foundation needed for life. I can think of no better investment than an education. The NYC Kids RISE initiative will benefit families who need seed money to get their college savings off to a good start." said State Comptroller Thomas P. DiNapoli. "As the cost of obtaining a college education continues to rise, saving now helps offset the costs of future expenses."
United Federation of Teachers President Michael Mulgrew said, “The NYC Kids RISE program will provide a wonderful benefit for thousands of New York City’s public school kids. I want to thank Mayor de Blasio, Commissioner Menin, and the Gray Foundation for this effort to ensure that more of our students – particularly those from needy families – will have a better opportunity to go to college.”
“More American jobs are requiring a college education,” said Council of School Supervisors and Administrators President Ernest Logan. “We applaud Commissioner Menin for this meaningful attempt to help more New York City families develop the financial discipline needed to pursue a college degree, and encourage New Yorkers take advantage of this program.”
“These accounts will serve as a tool to encourage both savings and the belief that post-secondary education is attainable across income levels. CEO will continue to be a partner in this exciting initiative that seeks to reduce poverty by broadening college access and success,” said Matthew Klein, Executive Director of the Center for Economic Opportunity and Senior Advisor for Service Innovation in the Mayor’s Office of Operations.
“Creating the expectation that all of our city’s children can pursue post-secondary educational opportunities is powerful; but taking steps to create a true pathway to help make that a reality is transformational. The Mayor’s Fund is proud to have a played a role in supporting the work of our City agency partners as this evidence-based approach was explored and developed, and we applaud Jon Gray and the Gray Foundation for this tremendous civic investment that will be a true opportunity-equalizer for generations to come,” said Darren Bloch, Executive Director of the Mayor’s Fund to Advance New York City.
“Too many New York families are struggling to make ends meet and pay for basic necessities, let alone able to set aside savings for their children’s futures,” said Representative Joe Crowley, Vice Chair of the Democratic Caucus and the author of federal legislation to create a national child savings program. “Every child, regardless of their economic background, deserves the opportunity to start their financial future on the right foot. By giving kids a head start and creating a culture of saving, child savings accounts can help put a higher education back in reach for more families. I applaud the City for making this commitment and for giving New Yorkers the opportunity to save for their children’s future. I will continue my efforts in Congress to help make saving for the future a possibility for more American families.”
“Investing in our students is never a mistake,” said Manhattan Borough President Gale A. Brewer. “Giving New York City’s children a head start by seeding college savings accounts is an exciting idea that’s absolutely worth testing with a pilot program.”
“Financial empowerment has been a hallmark of my administration, and I applaud Mayor de Blasio and Commissioner Julie Menin for launching NYC’s Child Savings Account,” said Brooklyn Borough President Eric L. Adams. “I am so heartened to be part of the launch of this effort, which I supported greatly through recommendations of my administration's report on combating consumer debt. This seed capital will be investing in the most secure of start-ups, our city’s children. I look forward to working with City Hall and all of our young people to grow this important endeavor.”
"Every child deserves to make their dream of college and careers come true. One of the most important things we can do to help them to succeed is to plan in advance for their financial future," said State Senator Carl L. Marcellino, Chair of the NY State Senate Education Committee.
"Every child should have access to the resources and tools they need to achieve their full potential," said Assembly Member Catherine Nolan, Chair of the Assembly Education Committee. "With this program New York City is providing students and families with the access and tools they need to support getting to college. I commend the City on the start of the Child Savings Accounts initiative and thank Mayor de Blasio and Commissioner Menin for their commitment to education."
“Nothing can be more important than early financial literacy and showing young people the importance of starting early on securing your future,” said Assembly Member Deborah J. Glick, Chair of the Assembly Higher Education Committee. “I applaud Commissioner Menin and the Administration's forward thinking and commitment to children.”
"The Child Savings Account initiative will help our students afford the college education they need for a successful career," said City Council Education Committee Chairperson Daniel Dromm. "At a time when many young people are hindered from pursuing higher education because of financial constraints, I am pleased that our city is actively taking steps to remove these barriers. I applaud Mayor de Blasio, Commissioner Menin and NYC Kids RISE for their leadership and offer them my full support."
“This is an incredibly exciting launch that will give thousands of New York City students the incentive and motivation to go to college,” said Andrea Levere, President of the Corporation for Enterprise Development (CFED), a Washington, D.C.-based nonprofit that works with public and private organizations across the country to establish CSAs. “Providing automatic enrollment in these accounts to kindergarteners starting school will automatically brighten their futures.”
“There is evidence to suggest that Children’s Savings Accounts are one of the few interventions that work on multiple dimensions – early education, affordability, completion, and post-college financial health – to improve outcomes and catalyze opportunity. Importantly, these effects are consistently strongest among lower income children and their families. New York City has taken the care and diligence to design a program that will improve children’s outcomes along all of these dimensions while building a culture of saving and going to college,” said William Elliott III, Director of the Center on Assets, Education, and Inclusion, University of Kansas School of Social Welfare.
“The Financial Clinic applauds the City for its adoption of one of the most innovative savings vehicles in the city’s history. Our financial coaches at Financial Empowerment Centers focus on long-term savings – like 529 accounts and Child Savings Accounts – as a critical part of building financial security. The City's accomplishment is an important step to help the city’s youngest and most financially vulnerable children find and fund a path to college," said Mae Watson Grote, Founder and Chief Executive Officer of The Financial Clinic.
“CCC has been a strong, long time champion for children’s savings accounts. We know in New York City that the majority of public high school graduates report plans to attend college or a post-secondary program; yet, only about a half of our City’s young adults between 25 to 34 years of age go on to hold an Associate’s degree or higher. We also know from years of research, that even a small amount of savings can foster a child’s college-oriented identity and dramatically improve their likelihood of applying for and completing college. We applaud Mayor de Blasio’s administration and the Gray Foundation for taking an important step that addresses income inequality and improves outcomes for New York City’s children and families,” said Jennifer March, Ph.D., Executive Director of the Citizens’ Committee for Children of NY.
“For the United States to succeed in the long run, our children must grow up to become educated and effective citizens,” said Michael Sherraden, Director of the Center for Social Development. At the Center for Social Development, we work on strategies to sustain positive futures for all children. Today, New York City is taking a crucial step to ensure a better future for its children. “There is enormous potential for CSA’s to attract contributions from multiple sources: gifts from family and friends, proceeds from fundraising projects at the school, contributions from local community organizations, gifts from philanthropy, and so on. A culture of saving for college can grow in the community.”