SEEDS of hope: How a $25 investment in every Santa Cruz County newborn is a giant leap for equity
A new program opens a free college savings account for every newborn in Santa Cruz County, and though the initial amounts deposited are relatively small -- $25 for every child, regardless of family income, and $50 if the baby comes from a low-income household -- just having an account offers a myriad of benefits for child and parents, advocates say.
Lawrence Shin and his wife, Claire Kim-Shin, were at Watsonville Community Hospital for the birth of their son in January when Claire’s phone started to ring. The call came from an unknown number, and like most people these days, the couple contemplated whether to even pick up.
When Kim-Shin answered, they soon heard a pitch that sounded too good to be true: Money would be deposited in a new college savings account for their baby through a program called Santa Cruz SEEDS. No barriers. No strings attached.
“It seemed kind of weird because basically they were offering something that was kind of unheard of in a lot of other places, right, the idea of someone giving you free money, which is basically what it was,” Shin recalled.
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The couple was a bit incredulous but asked to join the program. It still came as somewhat of a surprise, Shin said, when they actually got a letter in the mail, explaining that their son, Wynton -- named after famous trumpeter Wynton Marsalis -- was enrolled.
“We were pleasantly surprised that there was something like this happening,” Shin said, adding that he told his wife it seemed like a good social initiative. “All it is is an investment in our young people, whether they decide to stay in Santa Cruz County or not.”
Wynton is one of about 1,300 kids in Santa Cruz County currently enrolled in the Santa Cruz SEEDS program, which is run by the nonprofit Santa Cruz Community Ventures. The group wrapped up a pilot phase for the program that started in 2019 at the end of last year and launched the full-scale version of SEEDS — Saving and Engagement for Education and Development Success — on Jan. 1.
At its core, the program opens a college savings account for every newborn in Santa Cruz County. In an effort to reduce barriers to families, every child automatically gets it, but a parent can tell the organization if they want to opt out and the account will be closed. Even if the family moves out of the county, the account stays with the child.
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And though the initial amounts deposited in the accounts are relatively small -- $25 for every child, regardless of family income, and $50 if the baby comes from a low-income household -- just having an account offers a myriad of benefits for the parents and the child, said Maria Cadenas, executive director of Santa Cruz Community Ventures.
“I think there’s no doubt that the importance of assets, especially for families that have been left behind and have increasing wealth gaps, is really important,” she said. “What the studies have shown is that a child, an unborn child, with a college savings account, regardless of how much is in the account — it could be $1 — is … three times more likely to go to college and four times more likely to graduate. And it has to do with those expectations. The sense of hope. The sense of belonging, and being supported.”
Building an inclusive program was top of mind, Cadenas said.
“The program was designed in fact with a lot of low-income parents,” she said, “including undocumented parents and first-generation college students, including ‘Dreamers,’ to ensure that we were creating an equitable program.”
Cadenas recalled an early workshop with one of the first parents in the program. “She had her newborn in her arms and she looked down on her and said, you know, ‘You’re going to college. You don’t have to be like me,’” Cadenas said. “And I think that captures really what this program is about. Because it’s something so simple, right, and for her to immediately see the educational possibility for her child.”
The program’s goal is to have $500 by the time a child turns 5. The money grows over time through interest and via how the fund is invested; parents can also contribute. Once the child graduates from high school, they will be able to use the money toward college or vocational education expenses.
Local governments, including Santa Cruz County, have chipped in to help fund outreach and education for the program, contributing about $80,000 in fiscal year 2020-21. And the seed money for the accounts has come from state grants and individual and foundation philanthropy. Cadenas said the most recent numbers have about 70% of newborns getting $50 to start and the rest getting $25 but that historically the balance has been closer to 50-50.
The idea is that as a child reaches certain milestones — largely aligned with county health goals — more money is added to the account. The money would come from donations by partner organizations, foundations or individuals in the community.
Milestones include the child reaching a certain percentage of “well-check visits” — trips to the pediatrician — within the first two years, or completing recommended vaccinations or making a certain percentage of expected dental visits.
“We are currently actively fundraising to build those milestones,” Cadenas said.
A family with a child born in 2021 could already have $300 to $400 in their account, Cadenas said, between reaching milestones, a matching grant program for eligible families through California’s official college savings plan and the initial seed money: “So some of it doesn’t have to come from our coffers, it comes from partnerships that we’re bringing into the region.”
Across the country, college savings plans have continued to grow in popularity, popping up from Oakland to Oklahoma to Maine.
California particularly has seen “explosive growth” in children’s savings account programs in recent years, said Shira Markoff, director of children’s savings for Prosperity Now, a Washington-based nonprofit that helps organizations design their programs.
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And the benefits seem to go beyond just the monetary value.
“There’s some research on a randomized control study on a program in Oklahoma, it’s found that at age 4, there were improvements in children’s social and emotional development,” Markoff said. “It found less symptoms of maternal depression.”
Santa Cruz County Supervisor Ryan Coonerty helped lead the charge to get the SEEDS program off the ground locally. He remembers hearing speakers at a conference at the Obama White House talk about how much a child’s life is shaped in the first two or three years.
“That moment in time can have a long-term impact not only on their lives and the communities but then on government costs over the long run, on whether they end up incarcerated, out of work, drop out of high school, teenage pregnancy,” Coonerty said. “Much of it comes back to those first few years.”
To Coonerty, the program is a signal of hope and constitutes a major effort in addressing generational inequality and providing opportunity. “It’s a major investment, but it’s a long-term investment,” he said. “We’re investing in these kids for 18 years from now. And the choices that they’ll have, hopefully, created by this investment in them.”
For Shin and his family, the program had another added benefit. It prompted them to open an additional savings account for his son ... perhaps sooner than Shin would have otherwise.
“So I was able to set up another fund too, right, on top of it, thinking, like, ‘He’s going to need more,’” he said. “And I think that’s probably one of the side benefits of this particular program is that it brings an awareness to parents.”