Should Schools Give Students Money to Invest in Their Futures?

In what ways is your school investing in your future? Do you think it is equipping you with the skills and experiences to become financially independent and secure, such as providing internships, clubs, after-school programs, financial literacy courses or vocational training?

A nonprofit group in New York City is giving thousands of students in Harlem $10,000 each to invest. Its goal is to help students build wealth over their lifetimes and to close the racial wealth gap. What is your reaction to their plan? Would you want your community to adopt a similar one?

In “A Plan to Help Harlem Students Build Wealth: Start Them Off With $10,000,” Stefanos Chen writes about a bold pilot program to address wealth inequality:

A New York City nonprofit group, flush with millions in private capital, is piloting a first-of-its-kind savings program to address the racial wealth gap — by giving thousands of students in Harlem $10,000 each to invest.

The Harlem Children’s Zone, an influential anti-poverty organization, said it is raising $300 million for an initiative called Wealth Builds that will launch in Upper Manhattan, where the group operates, and expand to 10 other cities, including Atlanta and Minneapolis.

The group said it has already raised enough money to provide the funds to more than 2,200 youths: the entire student body at two charter schools it runs called Promise Academy, from kindergarten to 12th grade.

And most of the students don’t know it yet.

“The parents will definitely lose their minds,” Kwame Owusu-Kesse, the nonprofit’s chief executive, said with a smile, after a tour of one of the schools.

A kindergartner enrolled this year in the program could expect the $10,000 allotment, which will be controlled by professional money managers, to accrue interest of about 5 percent a year, Mr. Owusu-Kesse said. At the age of 25, the student could have roughly $26,000 in savings.

Admittance into the Promise Academy schools is decided through a lottery system with preference given to the local district, which is predominantly lower income.

The fund, Mr. Owusu-Kesse said, is an acknowledgment that education alone cannot bridge the gap in wealth, which has been growing along racial lines for decades. The median family income at a nearby public housing complex, St. Nicholas Houses, where many of the students live, was about $18,000 a year, he said, far below the poverty line.

“What good is financial education, if you don’t have the assets to apply said education to?” he asked. “It’s the next logical step.”

The $10,000 grants, called Youth Opportunity Funds, will be invested on behalf of students who will only be able to access the full amount at the age of 25, after reaching milestones like graduating high school and college, and completing financial literacy courses. Students who don’t reach all the milestones would still be entitled to part of the money.

The article discusses how the pilot fund could have dramatic effects:

For every dollar a typical white household had in 2022, a Black family had 16 cents, and a Latino one had 22 cents, according to the Urban Institute, a nonprofit research organization focused on upward mobility and equity.

Early access to capital is important because the wealth gap balloons over time. The typical younger Black family had median wealth of less than $1,000 in 2019, compared with over $25,000 for a similar white family, according to research by the Federal Reserve. A more established white family, led by someone over 55, had $315,000 in assets, compared with $54,000 for a similar Black family.

Darrick Hamilton, the founding director of the Institute on Race, Power and Political Economy at the New School, said the program is probably the largest private investment to address the country’s racial wealth gap, adding that he was excited about its potential.

“We look at wealthy people, and they already do this,” he said. “In some ways this is democratizing trust funds for others.”

Students, read the entire article and then tell us:

• Should schools give students money to invest in their futures? Why or why not?

• In what ways is your school investing — literally or figuratively — in your future? Are these ways effective?

• What is your reaction to the Harlem Children’s Zone pilot program that gives students in its charter schools $10,000 each to invest? How successful do you think it will be in creating financial independence and reducing wealth inequality? Would you want your community to adopt a similar plan?

• “My jaw dropped,” Elijah Grace, 19, said when he was informed that he would be included in the fun. “To be a young person of color, to know that someone believes that much in you, that they would invest that much money, it’s honestly — I don’t know how to put it in words.” How would you react to learning you had received a $10,000 grant from your school? What would you want to invest it in — a down payment on a home, further education or savings for your retirement?

• Kwame Owusu-Kesse, the chief executive of Harlem Children’s Zone, says, “What good is financial education, if you don’t have the assets to apply said education to?” Do you agree? Should schools and communities do more to help young people build wealth in their futures?

• What ideas do you have to better invest in our students?