529 savings plan: Why every penny counts


Feeling unprepared after high school, Ms. Tiller struggled in community college and eventually dropped out. “I know life is tough,” she said, “and I don’t want to see them wrestle the way I have to.”

Children’s savings accounts were designed 30 years ago by Michael Sherraden, founder of the Center for Social Development at Washington University in St. Louis, who proposed creating accounts for all children at birth. . Since 2007, he has been the principal investigator of a follow-up experiment of 2,700 newborns in Oklahoma, randomly divided into two groups: half received accounts of $ 1,000 at birth; the other received nothing. Many programs build on the centre’s research, which found that the stories raise both parents’ and children’s expectations about the child’s future.

So far, the main beneficiaries of the 529 accounts have been the better-off families who opened them on their own. There were 14.3 million 529 accounts totaling $ 437 billion in assets at the end of June, according to ISS Market Intelligence, a financial research and analysis firm.

But proponents believe that automatic account opening will help change that and may ultimately help close the wealth gap; New York’s so-called baby bond program is just one part of a larger economic justice initiative. In the pilot school district, some Astoria students living in social housing already have over $ 1,500 in their accounts, in part thanks to scholarships raised through the tenants association.

A similar effort helped Ms. Hudson-Figueroa’s daughter, now in fourth grade, increase her balance to over $ 500. The Woodside Houses Residents Association helped raise $ 35,800 – about $ 218 each – for Grades 1 through 4 students at PS 151.

As the school’s APE president, Ms. Hudson-Figueroa now helps other parents, answers questions, and guides them through the steps they need to take to maximize the savings they are entitled to.

“The main question I get most of the time is, ‘What should I do?’ She said. “And the best part is, I can tell them, ‘Your child is already registered.'”

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