Kindergartners in New York City could receive as much as $3,000 toward their college education from the city under a plan by elected officials that aims to combat income inequality and expand access to higher education.
The one-time contributions would be among the largest investments in a child savings account program in the United States. Under the proposal from the City Council, which would expand an existing initiative, students from low-income families in the city would receive $3,000 while other students would get $1,000. Both figures are considerably higher than the current contribution of $100.
As the cost of college has soared and the wealth gap has widened, supporters of the expansion say, the proposed investment could help in several ways. They argue it will provide a stronger foundation for children to attend college, while allowing them to graduate with less student loan debt and a greater ability to accumulate wealth later in life. Even without any additional investment, a $3,000 contribution could be worth $8,500 when a student enters college, based on the program’s current rate of return.
“If we’re truly going to attack income inequality, help to lift New Yorkers up and address the affordability crisis, we have to make a much larger investment for these children,” Julie Menin, the speaker of the City Council, said.
The proposal was introduced by Ms. Menin, who led the creation of the savings program more than a decade ago when she was the city’s commissioner of consumer affairs. It would cost $180 million annually, a tiny fraction of the city’s $125 billion budget, up from the current $12.7 million. She called it her highest budget priority.
It would need the support of Mayor Zohran Mamdani, who ran a campaign focused on affordability but excluded the proposal from his executive budget in May. But the budget has not been finalized, and negotiations are continuing. The Mamdani administration has signaled that the mayor is open to the expanded college account contribution.
“Our city has a responsibility to set every child on a path to success,” Jenna Lyle, a spokeswoman for Mr. Mamdani, said. “That commitment guides our work day in and day out to deliver a more affordable city that New Yorkers can raise a family in.” She added that the administration would discuss the proposal with the City Council.
College savings plans originated more than 40 years ago. The accounts, known as 529 plans, allow families to deposit money that can grow tax-free and be spent later on expenses such as tuition and textbooks for college or vocational school. Wealthier families have been more likely to sign up for them and benefit from them.
But the savings program in New York City, known as NYC Kids Rise, differs in several ways; for example, the accounts are created automatically for kindergartners in public schools, including the three-quarters of charter schools that have opted into the program. More than 380,000 children have had accounts since NYC Kids Rise started as a pilot program in Queens in 2017 before expanding throughout the city.
An increasing number of states and cities have started similar savings programs. Connecticut, which invests $3,200 for children from low-incomes families at birth, is among them. And the federal government recently created individual investment accounts for children, known as Trump accounts, that it will seed with a $1,000.
The NYC Kids Rise accounts have amassed more than $85 million. The city’s savings program also allows local businesses, community groups and neighbors to contribute and permits those donations to be shared among students at a school.
Mariela Regalado helped create a community fund-raiser for students at her daughter’s school, Public School 319, in South Williamsburg, Brooklyn. The contributions were enough to deposit $86 in the accounts of every kindergartner and first grader.
Ms. Regalado, a college and career counselor, created a 529 plan for her daughter when she was born and linked it to her NYC Kids Rise account. Her 6-year-old daughter has accumulated nearly $7,900 toward college.
“I was literally shackled with student loan debt,” said Ms. Regalado, 36, who said her remaining loan balance, about $48,000, could take another three decades to pay off. “I don’t want that for her.”
Plans such as NYC Kids Rise transform how children and families think about their expectations, their futures and their possibilities, said William Elliott III, a professor of social work at the University of Michigan and a leading researcher on college savings accounts and income inequality.
The financial component, especially the community fund-raising aspect of the city’s plan, gives children reason to believe that their city and their neighbors are invested in them, Professor Elliott added. The accounts also offer a chance to graduate without debt and immediately start accumulating wealth.
“There’s going to be more and more need for us to think about how do we redistribute wealth to maintain the meritocracy that we aspire to achieve,” he said. “It’s going to require programs like this that don’t just think about income as a way out of solving poverty but think about wealth as an important part of shaping kids’ futures.”
Matthew Haag is a Times education reporter focusing on New York City schools.
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