San Francisco bank accounts put children on college path 

click to enlarge School fund: San Francisco is the first city to start accounts for kindergartners. (AP file photo) - SCHOOL FUND: SAN FRANCISCO IS THE FIRST CITY TO START ACCOUNTS FOR KINDERGARTNERS. (AP FILE PHOTO)
  • School fund: San Francisco is the first city to start accounts for kindergartners. (AP file photo)
  • School fund: San Francisco is the first city to start accounts for kindergartners. (AP file photo)

Some 2,400 kindergartners have their own bank accounts courtesy of the city of San Francisco.

The city program, Kindergarten to College, is now in its second year, after a pilot run last year for 1,200 students at 18 schools. By next year, every kindergartner in The City’s public schools will have a savings account, said Leigh Phillips, manager of the San Francisco Office of Financial Empowerment, a division of The City’s treasury.

“This is pretty pioneering,” Phillips said. “It’s the first of its kind in the country.”

When a child starts kindergarten, The City places $50 in an account at Citibank, with an extra $50 if the child comes from a low-income family. Parents are encouraged to deposit their own money, and private philanthropies will match up to $100 of the family’s contribution each year. The philanthropies also will give families a $100 bonus if they set up automatic deposits into the account.

Phillips said students will have until they turn 25 to use the money. It can go toward a two- or four-year college or vocational school after  a student graduates from high school.

Other cities, such as Pittsburgh and Kalamazoo, Mich., have created scholarship programs to help graduating seniors attend college. But San Francisco wanted to get families thinking about higher education early, Phillips said.

“There have been many studies that show having money in a child’s name for college has an enormous impact,” she said. “It’s that college-going mindset.”

Gerna Benz, senior partner at Bay Area College Planning Specialists in Oakland, said it’s a good idea to start planning for college early. Yet a simple savings account might not be enough — Benz said college costs rose about 6.5 percent a year in the past decade and would probably continue to climb at that rate.

“Starting at an early age is fine, but it has to coincide with a well-rounded plan or portfolio,” he said.

acrawford@sfexaminer.com

 

Paying for education

San Francisco is opening Citibank college savings accounts for kindergartners. Calculations are based on the current interest rate for a Citibank account.

$50: Value of account at opening

$50.33: Value of account in 2024 if no contributions are made and interest rate is 0.05%

$2,658.85: Value of account in 2024 if parents add $100 each year, with matching donations

2011 2024
Annual cost to attend a UC school $32,000 $67,000*
Annual cost to attend a CSU school $24,000 $51,000*

* Projected figures

Sources: Moneychimp.com calculator, Bay Area College Planning Specialists

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Amy Crawford

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Friday, May 25, 2018

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