529 Savings Plan: Why Every Penny Counts

Feeling unprepared after high school, Ms. Tiller struggled in community college and ultimately dropped out. “I know life is hard,” she said, “and I don’t want to see them struggle like I have to.”

Child savings accounts were conceived 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 lead investigator in an experiment tracking 2,700 newborns in Oklahoma randomly assigned to two groups: Half received $1,000 accounts at birth; the other received nothing. Many programs draw on the center’s research, which has found that the accounts raise both the parents’ and child’s expectations about the child’s future.

Thus far, the biggest beneficiaries of 529 accounts have been more-affluent families who open 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 analytics firm.

But proponents believe that automatically starting accounts will help change that, and can ultimately contribute to narrowing the wealth gap; New York’s so-called baby bonds program is just one part of a broader economic justice initiative. In the pilot school district, certain Astoria students living in public housing already have more than $1,500 in their accounts, thanks in part to scholarships raised through the tenant association.

A similar effort helped Ms. Hudson-Figueroa’s daughter, now in fourth grade, raise her balance to more than $500. The Woodside Houses Resident Association helped raise $35,800 — roughly $218 each — for first through fourth graders at P.S. 151.

As the school’s P.T.A. president, Ms. Hudson-Figueroa is now helping other parents, answering questions and guiding them through the steps they need to take to maximize the savings they’re eligible for.

“The main question I get most of the time is, ‘What do I have to do?’” she said. “And the best part of it is, I can tell them, ‘Your child is already enrolled.’”