The state is directly investing money for low-income students and all newborns to attend college. After two years, the program is still not widely known by the students who need the most financial assistance

by Jacqueline Munis

May 31, 2024 – Nearly 3.7 million students and 667,000 newborns in California have money invested in a savings account to help pay for college. But most families don’t know the money is there.

Citlali Lopez, a second-year psychology student at Sacramento State, found out a few months ago she had $500 sitting in a California Kids Investment and Development Savings Program (CalKIDS) account. Although she’s been eligible to use the funds since she graduated high school in 2022, she had no idea until her sister, who works at a nonprofit that supports low-income students with scholarships and financial aid, told her to check her eligibility. Lopez was skeptical at first, but found she was eligible and registered her account.

“I was just really surprised that I was able to get some extra help,” she said.

Financial aid had been top of mind for her and guided her decision to go to Sacramento State. She plans on using the money to finish general education classes over the summer if financial aid will not cover it.

So who gets money? Under CalKIDS, all babies born in California receive a sum. Babies born between July 1, 2022 and June 30, 2023 received $25 deposits, and all babies born after July 1, 2023 receive $100 deposits.

As part of the program, all low-income first grade students receive a one-time deposit of $500. First-graders who are in foster care receive an extra $500  and homeless first-graders receive $500 more, totalling $1500 for some students. All the accounts are tax-free, and the money is invested whether or not families claim their accounts.

Additionally, the state spent $1.8 billion in the 2021-22 budget to provide a one-time deposit to all low-income students in grades 1 through 12 in 2022.

Yet, of the 4.3 million student accounts created, only 313,445 accounts have been claimed by families, meaning they have registered online and seen the amount in their accounts. Only 6.3 percent of newborn accounts have been claimed and 7.4 percent of student accounts have been claimed as of March 2024.

The state is slowly building awareness about college savings

CalKIDS is run by a three-person team led by Julio Martinez, the executive director of the Scholarshare Investment Board, an agency within the State Treasurer’s Office. It administers the state’s 529 college savings accounts, which allow families to invest money tax free to cover education related expenses in the future. The team is responsible for creating the accounts, notifying families about the accounts and explaining what CalKIDS can provide to families.

“With these programs, it takes time to kind of build brand awareness, and also to break down the skepticism that often exists when you get a letter in the mail that says you have free money,” Martinez said. CalKIDS staffers go to college fairs and financial aid nights and host online informational sessions to reach families and students.

The state allocated $22 million in the 2022 and 2023 budgets to market the program. In Los Angeles, Riverside, Fresno, and Sonoma counties, CalKIDS program info is sent to all families that request a birth certificate, according to Joe DeAnda, the director of communication at the State Treasurer’s Office. During the first three months of this year, registration in the newborn program has more than doubled, from 20,608 to 42,312 newborns.

In April, CalKIDS began targeting high school seniors, through social media, email and direct mail, according to DeAnda. By May, the number of claims among high school seniors increased by 74 percent. They have partnered with school districts, such as Hawthorne School District in Los Angeles County, where 87 percent of seniors have claimed their accounts.

Still, most of the funds for marketing CalKIDS remain unused. The 2023-24 California state budget reappropriated $8 million to CalKIDS for a statewide media campaign, and the Scholarshare Investment Board is currently soliciting proposals for marketing services, which were anticipated to start on April 1, but have not begun.

“If families are not aware of this program, then it’s not going to have the impact that we think it’s going to have,” Martinez said.

The fact that many families don’t start thinking about college until high school is one cultural obstacle that college savings programs like CalKIDS run up against, says Willie Elliott, a professor of social work and founder of the Center on Assets, Education, and Inclusion at the University of Michigan.

“So, we can’t expect that we put one of these programs in place, and, instantly, people get it and start functioning in that way,” Elliott said.

Elliott has helped develop state and local college savings programs in Pennsylvania, New York City and Washington, D.C. He says that enrollment is not the best measure of success of programs like CalKIDS, especially this early on in the program.

“What you have in place in California is the infrastructure and now you have to do the work of making communities aware,” Elliott said.

He suggests that creating a culture around college savings through programs like CalKIDs will lead to positive outcomes. Those include increased account enrollment, more family conversations about going to college, and generally less stress for families who will be hopeful for their children’s future.

The conversations about college are as important as the amount of money actually in the account, Elliott said. Elliott’s research has shown that low-income students with a college savings account are three times more likely to attend college and four times more likely to graduate than students without an account.

Amanda Cook, a mother of six who has four children eligible for CalKIDS, is the homeless student advocate at Marysville Joint Unified School District in Yuba County, where she works to support homeless students and help them graduate. She said a lot of the families she works with don’t have college at the top of their mind because they’re thinking about urgent concerns like where they will sleep.

She said if schools were able to register students, it would be helpful for the families she supports. She also said training for school staff and counselors on the program as well as outreach from California Health and Human Services would help build awareness for schools and families.

CalKIDS joins local programs investing in students’ education

For many students, CalKIDS can be coupled with one of more than a dozen local child’s savings account programs in California. Launched in 2010 by then-mayor of San Francisco Gavin Newson, Kindergarten to College was the first program in the country to include automatic and universal enrollment.

Over the last 14 years, the program has been able to refine its outreach efforts to meet the needs of San Franciscans, said Amanda Fried, the chief of policy and communications at the San Francisco Office of the Treasurer & Tax Collector. Students are eligible no matter their documentation status and can easily make cash deposits into their accounts.

“People have so many things on their plate, and so many competing priorities, and I think a huge mistrust of the financial system, which is totally warranted,” Fried said. “So this program just kind of eliminates so many barriers for families.”

The program’s five-person team hosts weekly online office hours in English and Spanish, texts resources and reminders to parents and trains teachers and counselors as school ambassadors to explain the program and answer questions. Students take field trips to Citibank to make deposits into their accounts, so they can physically contribute to their futures.

“We really have an intentional focus on schools where typically students are much less likely to go to college. That’s where we focus our in-person resources,” Fried said. ”We’re on the ground at those schools, talking to families constantly.”

Oakland Promise has a child’s savings program that starts in kindergarten, also called Kindergarten to College, alongside a program for newborns for Medi-Cal eligible families called Brilliant Baby. Veena Pawloski, the chief program officer at Oakland Promise, said they use community-based organizations to act as enrolling partners.

Can college savings accounts help combat poverty?

The aim of college savings programs like CalKIDS is not for money deposited by the state to grow enough to pay for college entirely. Rather, the program intends to ease some of the burden of college costs and help students create a college-bound identity.

Last year, UCLA opened the CalKIDS Institute in partnership with the state to boost outreach as well as research the program’s reach and which demographics they should be targeting based on enrollment. The institute’s director, Nayiri Nahabedian, said that, ultimately, the point of all these programs is to make college seem like an attainable goal for students and show them that the state, their community and their family believe that they can pursue higher education.

“CalKIDS made me realize more how much people are willing to help students,” said Lopez, the Sacramento State student.

“For a lot of students [the money] can make the difference between deciding to go and not deciding to go. It can be the difference between having a laptop and not having a laptop, having WiFi at home and not having WiFi at home,” Martinez said.

In addition to registering, students can connect their CalKIDS account to a ScholarShare 529 account where families can contribute their own money, which is invested. Six percent of claimed student accounts and 35 percent of claimed newborn accounts have been connected  to a ScholarShare 529 account. According to Martinez, families have, on average, $2,890 in their Scholarshare 529 account connected via their CalKIDS account.

Evelyn Garcia Romero, a senior at Calistoga Junior-Senior High School, did not know before talking to CalMatters that she could add her own money into a Scholarshare 529 that has accrued $32 in addition to the original $500 deposit.

“I feel like every cent counts and makes a difference,” said Garcia Romero, who plans on using her CalKIDS money and future savings to go to law school. “So, having an extra $500 would be so helpful and will definitely encourage me to attend college even more.”

Munis is a fellow with the College Journalism Network, a collaboration between CalMatters and student journalists from across California. CalMatters higher education coverage is supported by a grant from the College Futures Foundation.

by Aaron Sankin

On April 30, a popular and widely used government program began the process of shutting down due to congressional inaction. With its demise, closing the digital divide becomes considerably more difficult.

The federal government first launched a broadband subsidy program during the depths of COVID-19 pandemic lockdown, where internet connections became many peoples’ only window into the outside world. That effort, the Affordable Connectivity Program (ACP), was made permanent as part of the 2021 Infrastructure Investment and Jobs Act. It offered a $30 monthly subsidy ($75 on tribal lands) to qualifying low-income households for broadband internet or cell phone bills. The program also offers up to $100 toward a computer or tablet.

However, it came with a major caveat: The $14.2 billion Congress allocated toward the program was a one-time thing. When the money ran out at some point in the future, Congress would have to infuse the program with more money or find a more permanent funding solution.

That future has officially arrived. More than 23 million American households, about 45% of all those eligible nationwide, will no longer receive the full subsidies that previously helped them get online. Two-thirds of those households had “inconsistent or zero connectivity prior to ACP enrollment,” a recent Federal Communications Commission survey revealed.

Partial subsidies of $14 ($35 for households on Tribal lands) will be available for some ISP customers for service in May, according to an FCC notice. But that will be the program’s last disbursement.

“Many recent press reports about the impending end of this program describe how ACP households across the country are now facing hard choices about what expenses they have to cut, including food and gas, to maintain their broadband access, with some households doubtful they can afford to keep their broadband service at all,” FCC Chair Jessica Rosenworcel wrote in an April letter to congressional leaders. “These press reports echo what the Commission has been hearing from ACP households directly, with many writing the agency to express their distress and fear that ending this program could lead them to lose access to the internet at home.”

Case in point: Alfredo Camacho, who lives in Guadalupe, California, told CalMatters that because he is no longer able to afford home internet service, he’s started taking his daughters to the parking lot outside a local library so the family can use the free wifi to do homework and look for jobs.

“This takes away grocery money,” said Camacho, who is one of around three million Golden State residents losing access to the subsidy. “Being a single father, $30 goes a long way.”

In anticipation of the shut-down, the program stopped accepting new sign-ups in early February. Participating households started receiving notifications about the program’s  potential shuttering in January. After it ends, internet service providers are required to allow ACP-using households to cancel without termination fees.

The program has been an essential part of how millions of Americans get online, with nearly one-in-five U.S. households relying on the subsidy to keep their internet subscriptions active. Uptake has been especially strong in areas with high-poverty rates in both urban and rural areas.

The program is “helping people who did not previously have access to get online,” wrote John Horrigan, a leading researcher tracking connectivity trends, who noted that enrollment has been especially high in diverse, high-poverty areas. “In other words, the answer to the question of whether the ACP is closing the digital divide is a clear yes.”

In 2022, the Biden Administration announced securing commitments from 20 providers to begin offering internet service with at least 100 Mbps speeds to ACP-qualifying households — for just $30 a month and without data caps. When combined with the $30 monthly ACP subsidy, internet connectivity became effectively free for low-income households.

The program also increased the reach of another Infrastructure bill-created effort: The Broadband Equity Access and Deployment (BEAD) program. BEAD is a $42 billion pool that subsidizes internet providers to build new broadband networks in parts of the country where infrastructure is lacking. A Common Sense Media study found that by allowing more people to sign up for internet service, ACP reduced the per-household BEAD subsidy necessary to incentivize internet providers to build new networks in rural areas by 25%. That meant money the government has budgeted to expand broadband coverage could go a lot farther in closing the rural digital divide.

ACP is also massively popular with the public. A survey released last year found 78% of registered voters supported extending its funding. That support crossed the political spectrum, with nearly all Democrats and just over two-thirds of Republicans responding in favor of its continuation.

On Capitol Hill, the program initially appeared to have uncommonly broad support. Last fall,  45 lawmakers, 29 Democrats and 16 Republicans, wrote to congressional leadership asking them to make ACP extension a priority. “We have a unique window of opportunity to ensure that every family and child — rural, urban, and suburban — have access to affordable broadband, and can thrive in the digital age. ACP has become a lifeline for Americans, and we cannot afford to let it expire,” they charged.

It has even united the left and right sides of the political spectrum. The Communication Workers of America, a labor union representing many telecom employees, has advocated for renewing the program. (Full disclosure: The CWA is the parent union of The NewsGuild-CWA, which represents employees of The Markup and CalMatters.) Non-profit advocacy groups like Common Sense Media and the National Digital Inclusion Alliance organized drives for supporters to call their representative about the program’s looming expiration. The R Street Institute, a libertarian think tank, has made its own push – hailing the program as a model for other government connectivity efforts. Conservative publisher Steve Forbes wrote a supportive op-ed for Fox Business.

“It’s often said there are three parties on Capitol Hill – Republicans, Democrats and appropriators. In a rare moment of bipartisan agreement, the first two have recognized the positive impact of the Affordable Connectivity Program,” Forbes wrote. “Now it’s time for the appropriators to get on board and find a solution to permanently fund the program.”

A coalition of more than 230 nonprofit groups and municipal governments, ranging from the NAACP to the City of San Antonio, Texas, wrote a letter begging congressional leaders to renew the program.

ACP didn’t just have bipartisan backing, it also had bipartisan uptake. A report by researchers at USC’s Annenberg School for Communication and Journalism found a nearly even split in households taking advantage of the subsidy residing in Democratic and Republican congressional districts.

In 2022, The Markup published an investigation showing how several internet service providers disproportionately offered the worst internet deals to poorer, less white, and historically redlined neighborhoods, in major cities across the country. By way of comment, many companies highlighted their participation in ACP as a defense against their inequitable infrastructure deployment and pricing practices. When it comes to closing the digital divide, ACP is the method the telecom industry points to as an ideal solution – and industry group USTelecom has come out in favor of its extension, alongside individual providers such as AT&T.

Companies have also announced their own, private efforts to fill in the gap left by ACP’s expiration. AT&T, for example, was one of the companies that rolled out one of the $30, 100 Mbps internet plans. The company will continue offering this low-cost plan, which will no longer be effectively free, after the end of ACP.

A directory of ongoing low-cost internet plans offered by internet providers, compiled by the National Digital Inclusion Alliance, is available here. The FCC’s Lifeline program, which provides a monthly $9.25 ($34.25 on Tribal lands) connectivity subsidy to eligible households, will remain in place; however, Lifeline’s eligibility qualifications are more stringent than the ACP’s.

The ACP has had its own controversies. A 2022 report from the FCC’s Inspector General identified some likely fraud in the program. “In the most egregious example identified, more than one thousand Oklahoma households were enrolled based on the eligibility of a single (qualifying), a 4-year-old child who receives Medicaid benefits,” the report noted.

Some Republican senators jumped on the report to attack the program. “Any extension of this program—if it should occur at all—must only happen after there’s a thorough review of the program’s effectiveness at increasing broadband adoption and preventing fraudulent, wasteful, and duplicative spending,” Texas Republican Sen. Ted Cruz told the Washington Post.

According to the Institute For Local Self-Reliance’s ACP Dashboard, there are 1.7 million Texas households currently using the program.

Last October, the Biden Administration requested Congress pass funding to keep the program active through the end of 2024. “Without this funding, tens of millions of people would lose this benefit and would no longer be able to afford high-speed internet service without sacrificing other necessities,” read a White House press release.

Those efforts have not proved successful.

While the $1.1 trillion spending bill passed in March avoided a government shutdown, it didn’t contain a provision to fund ACP – despite the pleadings of a supportive letter sent to Congressional leadership by dozens of U.S. senators.

Early this year, lawmakers introduced stand-alone legislation that would add $7 billion to fund the program through the end of the year. The House version, introduced by Democratic Rep. Yvette Clarke of New York, has attracted 224 co-sponsors, including 22 Republicans. That’s above the threshold of 218 votes required to pass a bill. Even so, Republican leadership has not elected to move the bill out of the Appropriations Committee, where it’s been stalled since January.

On Tuesday, Democratic Sen. John Fetterman of Pennsylvania introduced a bill that would pay for ACP on an ongoing basis through the Universal Service Fund, a pool of money funded by fees imposed on telecommunication providers that currently pays for things like Lifeline and a program supporting broadband connections for schools and libraries.

This article is copublished with The Markup, a nonprofit, investigative newsroom that challenges technology to serve the public good. Sign up for its newsletters.