SAN FRANCISCO–The first class of kindergarteners who were enrolled in a unique program that gave each of them a $50 savings account has now graduated from high school, and the results offer some insights into the lessons learned along the way.
In 2011, 600 other low-income public-school students in San Francisco were each given a bank account with $50 as part of a program that expanded the curriculum from reading and writing to interest rates.
Aisha Brown, the mother of one of those students, 17-year-ool Tierra Ferrand, who now has more than $1,500 banked and is off to Grambling State University in Louisiana, told the Wall Street Journal that while the balance may be small, the account changed their approach to money and saving.
According to the Journal report, San Francisco’s Kindergarten to College Program, which now gives $50 in savings to every student, has 52,000 active accounts with a total balance of $15 million—$10 million of which came from deposits made by the students and their families.
Replicated in 39 States
The program aims to be both financial education and a small start to college savings, and has been replicated in 39 states across the country, the Journal report stated, adding that the need for such programs stems from two of the biggest financial challenges faced by millions of American families: low levels of financial literacy and the skyrocketing cost of higher education.
The 2023 graduating class members of the San Francisco program, the first group to have the accounts since kindergarten, averaged a balance of $1,422, about 28 times the initial deposit, the Journal report stated.
The Journal noted that while that amount would only cover a tiny fraction of a year’s tuition, research by William Elliott III, a professor of social work at the University of Michigan, suggests that low-income families with even a small amount of college savings are significantly more likely to attend and finish college.
How Program Works
The program works this way: Students are automatically enrolled in the Kindergarten to College Program and are given a Citibank account with a $50 balance.
“Students and their families are then encouraged to build up their savings through various incentives, including art competitions and scholarship opportunities for which winners can earn extra money for their accounts,” the Journal explained. “The city also matches deposits from low-income families at certain schools. The accounts, which earn a small amount of interest, do have some restrictions: The money cannot be accessed until college and can only be directed to higher education-related expenses.”
According to the Journal, although every San Francisco public-school student starts with a $50 account funded by the government, most families don’t add to their balances. Roughly a quarter of families have deposited their own money.
‘A Core Challenge’
“One core challenge of the program is reminding people that they have it,” the Journal reported. “Parents receive introductory letters informing them a college-savings account has been opened in their child’s name, along with a bank ID card. But there is no obligation to use the account.”
To boost participation, one official said it would help to have more classroom instruction tied to the real-life accounts. But so far, there has been some resistance among teachers who say they are just trying to keep pace with the current curriculum, the Journal added.
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