Every child born in California would get a state-seeded college savings account unless their families opt out, under recently amended legislation by Assemblyman Adrin Nazarian, D-Los Angeles.
The Children’s Savings Account Program created by Assembly Bill 34 aims to increase the number of young people who attend college. Starting Jan. 1, 2018, all of the roughly 500,000 children born in California each year would have a 529 tuition savings account opened in their name, with an initial contribution from the state. No amount has been set in the bill.
“Wealth inequality is closing the door on middle- and lower-income advancement nationwide,” Nazarian said in a statement. “By creating an opt-out child savings account, we can jump-start our children’s financial independence.”
California already sponsors a 529 college savings program, Scholarshare, but people must enroll in it. According to Nazarian’s office, parents most likely to enroll their children in the plan have more education and financial wherewithal than parents who do not.
Amendments to AB 34 late last week flesh out what had been spot legislation.
Under the proposal, the state would give more money to the children of families with adjusted gross income of less than $75,000. The state also would match the contributions of those families. Philanthropic foundations and other groups also could give to the accounts.
Maine, Nevada and Rhode Island already have opt-in college savings programs, with initial deposits of varying amounts. Illinois and Oregon are working to create their own programs. Last year, California created a state-managed retirement program for workers without employer-sponsored plans. It is scheduled to begin enrolling workers in 2018.
Nazarian’s bill is scheduled to be heard April 25 in the Assembly Higher Education Committee.