By Shannon Rasberry
October 15, 2010
San Francisco has launched a new college savings program intended to make college more affordable and reduce families' needs for student loans, according to an announcement last week by the mayor's office.
Kindergarten to College (K2C), being touted as the nation's first universal children's savings account program, will eventually open college savings accounts for all San Francisco kindergarteners enrolled in public school. Each child's savings account will be opened automatically when the child starts kindergarten, and each account will be funded with a one-time initial seed deposit from the city and matching funds from participating corporations, nonprofit groups, and philanthropic foundations.
Families are encouraged to contribute savings to the accounts from the time their child is in kindergarten until he or she graduates from high school.
"There's no better long-term investment we can make as a city than helping our kids go to college, and Kindergarten to College will provide working families with the financial tools to turn a college education for their child from a distant dream to a practical reality," said San Francisco Mayor Gavin Newsom ("Mayor Newsom and City Leaders Launch ?Kindergarten to College,' " San Francisco Mayor's Office press release, Oct. 5, 2010).
Expected to launch by Dec. 1, the K2C program will initially provide college savings accounts for 1,200 newly enrolled kindergartners at 18 San Francisco public schools. The full program will roll out over three years, doubling the number of enrolled kindergartners to 2,400 next year and enrolling the city's entire public kindergarten population the year after that.
The K2C accounts, which will be created, opened, and managed with help from Citibank, will each get an initial deposit of $50 in taxpayer money from the city. Lower-income students who qualify for the federal government's free or discounted lunch program will get $100.
The money in these accounts will only be able to be used to pay for college or other postsecondary schooling, such as vocational training.
As the program grows, more organizations like EARN, a San Francisco-based nonprofit that helps low-wage families achieve prosperity, are expected to help build up participating families' college savings by matching the funds that families contribute to the K2C accounts.
"At EARN, we see every day that with the right tools and incentives, low-income families can and do save, often at higher rates than wealthier families. That's why we are so committed to supporting the city's effort by providing a $100 savings match for the first additional $100 saved by families participating in the K2C program," said EARN president and CEO, Ben Mangan.
The program has also received a commitment from the San Francisco Foundation to provide savings matches and other incentives as K2C is implemented.
"[K2C] has the potential to transform lives and our entire community. The San Francisco Foundation is honored to be a part of this important collaborative, and we are enthusiastically looking forward to providing savings incentives for participating families," said San Francisco Foundation CEO, Dr. Sandra Hernandez.
In order to raise the financial management skills of students and boost the success of the K2C program, financial education has been integrated into San Francisco's K?12 math curriculum. San Francisco is the first city in the nation to integrate financial education into its pre-college math classes, and schools will use K2C accounts as teaching tools.
City officials want to educate families on the benefits that small deposits, combined with compounded interest over roughly 12 years, can provide when it comes to paying for college and avoiding debt from student loans. Officials hope the program will prove especially beneficial for the estimated half of all black and Hispanic families in San Francisco who don't have savings accounts.
"We're going to work with the families so they can see that if they could do just $5 a month, or $10 ... that's going to result in literally thousands of dollars after 12 or 13 years," said city treasurer, Jose Cisneros ("S.F. First U.S. City to Start College Savings Plan," San Francisco Chronicle, Oct. 5, 2010).
For 2010, the program's inaugural year, the city has budgeted $257,000 for the program's set-up and to cover the initial crop of 1,200 kindergartners, who make up about a quarter of all kindergartners in San Francisco public schools. Full coverage for every public-school kindergartner is planned by 2012?13.
"No one else in the country is doing this," said Newsom. "We are not just saying every child can go to college. We are now providing families with the financial tools necessary to make this a reality."
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