I asked my colleague Tara Siegel Bernard, who as a personal finance reporter understands everything from federal debt limits to stimulus payments, to explain how these accounts will work. Every preschooler at a New York City public school got something new this year: a college savings account with $ 100 in credit. By high school in the 2030s, the average account is valued at $ 3,000. That’s not enough to cover tuition fees, but there is research that suggests other important benefits. Even a small amount in a dedicated college account seems to increase the chances of a student staying in school and going to college.
I’ve attended a lot more PTA meetings than in pre-pandemic times because they’re now held through Zoom. During our last meeting, our children’s elementary school principal mentioned that every kindergarten child would be given a college savings account of $ 100. As a money reporter and mother of a kindergarten, my ears pricked up my ears – and I started reporting to find out more.
How did you hear about the program?
How can I access the account if I have a child in school?
Your kindergarten child will be automatically enrolled, but you will not be able to activate the account until January. The city is currently holding meetings to provide parents with more information on how the program works – and there will soon be an option to opt out.
But I can’t think of any reason why anyone would want that. Free money is free money, even if it’s a modest amount to start with.
And there is more than the initial $ 100. How much more and what do children (or their parents) have to do to get it?
Here’s how it will work: After the program went live in January, parents can take a number of steps, each of which will make $ 25.
You can earn up to $ 200 in additional rewards.
Once you go online to activate the account, that’s $ 25. Open your own college savings account and link it to the program’s scholarship account and your student will raise an additional $ 25. Deposit at least $ 5 into your own account? You have the idea.
After that, students from first through fifth grades receive a dollar, up to $ 100, for every dollar their family saves in their own bank account.
How much can I deposit for my child? Is there a limit to how much of my own money I can deposit? When can i withdraw money?
I’ve written a complete guide to college savings accounts. The TLDR Version: When you open a college savings account known as a 529 account, you can basically fund it to your heart’s content as there are typically no annual contribution limits for 529s, although the overall limits vary by state.
In New York, for example, you can donate up to 520,000 (!) Per student. (This includes all New York State sponsored accounts for the same beneficiary.)
However, donations are considered gifts. That means each parent can typically deposit up to $ 15,000 annually with no tax consequences. With deep Daddy Warbucks purses, you can contribute up to $ 75,000 (double for married couples) in 2021 using a strategy of treating it as a gift spread out over five years.
If I don’t put in my own money, how much will I have when my child is old enough for college?
You can withdraw the money tax free once the student has eligible expenses to spend it on. This includes school or vocational school tuition, books, and many other related costs. Thanks to a new law, the money from 529ers can also be used to pay student loans.
The final amount available really depends on whether the program is as successful as everyone is hoping it will be. Students can potentially raise huge amounts of money through community scholarship campaigns. A great example that happened in the pilot school district in Astoria, Queens. The tenants’ association of a large public housing complex raised $ 1,000 each for more than a hundred elementary school students living there. Some of these children now have accounts worth more than $ 1,500.
The nonprofit that administers the program, NYC Kids RISE, estimates the average kindergarten kid’s account could be worth around $ 3,000 by the time they graduate from high school. And it assumes an annual return of around 5 percent.
News highlights business
- Kindergarten allowance that can be spent in college
- Check out all the news and articles from the business news updates.
Disclaimer: If you need to update / edit this article please visit our Help Center. For the latest updates, follow us on GÖÖGle news
