One gift that may not have been on parents’ radar this holiday season is an investment in their child’s education. Luckily for parents in Pennsylvania, the state has donated $ 100 to support the education of every child under age 3 – they’re just waiting for families to claim it!
Many people don’t know that in 2019, Pennsylvania launched the nation’s largest statewide education savings program, called Key researchers. For every child born after December 31, 2018, the state invested $ 100 in a tax-free, interest-bearing savings account. That’s right: free money is waiting for you, and all you need to get started is your child’s birth certificate. Once families have signed up, they can tie the $ 100 to a 529 accountan educational account that is also tax free and earns interest. This type of account is unique because everyone (including friends and grandparents) can easily make contributions. Imagine how easy holiday shopping can be in the years to come, too!
Many of us may have forgotten the math lessons where we learned interest. But it’s a very powerful tool when it comes to building savings. For example, investing even $ 5 per week means that you will save over $ 4,000 in 18 years. However, when you add the extra money earned from an average interest rate, you can expect to see your money almost double! This money is eventually available to pay for tuition, fees and books for a college, technical school or vocational training of 2 or 4 years.
So why are two pediatricians writing about an educational program? Because education is linked to wealth, and wealth is deeply linked to health. Research shows that Americans with higher levels of education have better job opportunities, income and resources to live longer and healthier lives than those who are less educated. Data from 2020 shows that Americans with a the baccalaureate earns 40% more on average than those with a high school diploma. Studies show that higher income is associated with better health, including lower risk of heart disease, improved mental health and live a longer life.
You might be wondering if a small investment now can really make an impact on a child’s health and opportunities later on. Research shows it is possible. A study found that a child who has school savings of only $ 1 to $ 499 before reaching college age is finished thrice more likely to enroll in university and two and a half times more likely to graduate than a child with no savings. Another study found that receiving a $ 1,000 investment in a 529 account was associated with higher scores on social and emotional development tests for kids, lower rates of maternal depressive symptoms and increased parental expectations that their child will go to college.
While claiming the $ 100 gift for your child might seem like a no-brainer, you might want to learn more about 529 accounts before opening one. There is a Faq managed by the Pennsylvania Treasury to get you started. Also consider taking advantage of local services such as To clarifywhich offers free financial advice to families in Pennsylvania.
As you move into 2022, keep in mind that there is still a $ 100 giveaway awaiting your child under 3, and plenty of ways to make a similar investment for older children. While a toy or book may have put a smile on the face of the kid in your life this past vacation, saving a few bucks for school now can have a big impact down the road. The smile as they finally go through this graduation milestone will be all the greater knowing that you have invested in their educational (and health) future and helped make them a Keystone Fellow.
Zoe Bouchelle, MD, is a pediatrician and researcher in the National Clinician Scholars Program at the University of Pennsylvania. George Dalembert, MD, MSHP is a pediatrician and medical educator. They are comrades of the Leonard Davis Institute for Health Economics at the University of Pennsylvania, members of PolicyLab at the Children’s Hospital of Philadelphia (CHOP) and run programs for CHOP Medical financial partnershipwhich tackles poverty through community and intersectoral collaborations with the support of the Healthier Together and Project of possibilities initiatives.