Savings

All freshmen in Los Angeles now have a college savings account. Will families use them? |

CHRISTIAN MARTINEZ Los Angeles Times

A new program offers all freshmen enrolled in the Los Angeles Unified School District — about 31,000 students — a free college savings account.

The program, Opportunity LA, launched this week and aims to encourage families to start saving early for college or other post-secondary education such as trade school by removing barriers such as paperwork and eligibility issues that could prevent families from opening accounts.

“This program does more than give children and families a financial boost to make college more affordable and accessible,” LAUSD Board Vice Chairman Nick Melvoin said in a statement, “ it also instills an academic mindset in our students from an early age.”

Opportunity LA accounts are similar to other programs, like state-backed ScholarShare529, that offer tax-free savings accounts for college expenses.

Every freshman in the district receives an account and a $50 start-up deposit, regardless of parental income, immigration status, or other factors. Families who do not wish to participate must withdraw from the program.

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The city holds all accounts so as not to interfere with public benefits a family may receive, officials said.

“It’s an additional tool in the toolbox,” said Abigail Marquez, executive director of the city’s Family Community Investment Department, which helps oversee the program. “It’s a way for the city to partner with the school district to encourage and create a college culture in the area and to encourage more young people to pursue post-secondary education.”

Marquez said the program has been in development for a few years, with the department reviewing the results of a similar program launched a decade ago in San Francisco under Gavin Newsom, who was the city’s mayor at the time.

This kindergarten through college program can offer information about how families in Los Angeles can use accounts and which demographics are likely to benefit the most.

According to data from the Kindergarten to College website, current to February, 23% of the roughly 50,000 accounts in the program have received deposits outside of promotions such as initial capital. The website says nearly $6.8 million has been saved so far.

“The fact that we’ve been able to break up 20% of our families, and that’s not including all the families who are probably saving on their own, we’re really proud of,” said Amanda Kahn Fried, Chief Policy and communications for the office of the treasurer and tax collector of San Francisco.

Fried added that about 50% of families who saved are eligible for free or reduced lunch programs from the San Francisco Unified School District.

But according to a 2020 study by the program, the overall filing rate for Black, Hispanic, Pacific Islander and Native American families was 17.8%, “or 4.3 percentage points lower than for white families, indicating that there is more work to be done to help support [minority] families in the program.

Only 10% of Black, Hispanic, Pacific Islander and Native American families continued to make deposits after the first year of the program. Filing rates for Asian families approached 30%, according to the report.

Fried noted that even families who struggled during the COVID-19 pandemic and accessed funds from kindergarten through college for emergency withdrawals resumed their deposits “almost immediately.”

“We really see at every level that if you meet families where they are, families are desperate to save for their children’s future and support their aspirations,” she said. “It’s our responsibility as government to make this as simple as possible.”

Fried acknowledged that the program may not have a substantial impact on some families’ ability to pay for college. But it’s beneficial in other ways, she said.

“These programs weren’t created to solve the problem of college affordability,” Fried said. “I would say that the research that kind of underpins this work is about building aspirations.

“It’s very clear to families that the amount you save is not what’s important,” she added. “It’s that you take action, you talk about college with your kids. You show them that you believe in them and that the city believes in them.”

The model appears to be gaining momentum: Last year, Governor Newsom proposed a $2 billion program to provide nearly 4 million low-income children with savings accounts with an initial deposit of $500. dollars.