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Pa. parents, don’t miss this $100 gift for the education — and health — of each child under 3

It may not sound like a lot of money now, but thanks to the magic of compound interest, the Keystone Scholars contribution can seed a child's future education, which can mean better health too.

One of the posters for the Keystone Scholars programs used to inform patients by the Einstein Healthcare Network.
One of the posters for the Keystone Scholars programs used to inform patients by the Einstein Healthcare Network.Read moreCourtesy of Alex Felts

One gift that may not have made it onto the radar of parents this holiday season is an investment in their child’s education. Fortunately for Pennsylvania parents, the state has made a $100 gift to support the education of every child under 3 — and the state is just waiting for families to claim it!

Many people don’t know that, in 2019, Pennsylvania launched the largest statewide educational savings program in the country, called Keystone Scholars. For every child born after Dec. 31, 2018, the state has invested $100 in a savings account that is tax free and earns interest. That’s right — free money, waiting for you, and all you need to get started is your child’s birth certificate.

After families have registered, they can link the $100 to a 529 account, an educational account that is also tax free and earns interest. This type of account allows anyone (including friends and grandparents) to easily make contributions. Imagine how easy holiday shopping can be in future years, too.

Many of us may have forgotten the math lessons we learned about compounded interest. But it’s a very powerful tool for building savings. For example, investing even $5 a week means you could accumulate more than $4,000 in 18 years. That money is eventually available to pay for tuition, fees, and books for two- or four-year college, technical school or career training.

So, why are two pediatricians writing about an educational program? Because education is tied to wealth, and wealth is deeply tied to health.

Research shows that Americans with higher levels of education have better job opportunities, earnings and resources to live longer, healthier lives than those with less education. Data from 2020 reveal that Americans with a bachelor’s degree earn 40% more on average than those with a high school degree. Studies show that a higher income is associated with better health, including a lower risk of heart disease, improved mental health and living a longer life.

You may wonder whether a small investment now can really affect a child’s health and opportunity later. Research shows that it can. One study found that a child who has school savings of just $1-$499 before reaching college age is more than three times more likely to enroll in college and 2½ 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 tests of social and emotional development for children, lower rates of maternal depressive symptoms and increased parental expectations that their child will attend college.

Although claiming the $100 gift for your child may feel like a no-brainer, you may be interested in learning more about 529 accounts before opening one. There is an FAQ page run by the Pennsylvania Treasury to get you started. Also consider taking advantage of such local services as Clarifi, which offers free financial counseling to Pennsylvania families.

Remember that there is still a $100 gift waiting for your child under 3 and many ways to make a similar investment for older children. Although a toy or book may have made the child in your life smile during the holidays, setting aside a few dollars for education now can make a big impact later. The smile as your child eventually walk across that graduation stage will be all the bigger, knowing that you invested in that person’s educational (and health) future and helped make that person a Keystone Scholar.

Zoe Bouchelle is a pediatrician and research fellow in the National Clinician Scholars Program at the University of Pennsylvania. George Dalembert is a pediatrician and medical educator. They are fellows of the Leonard Davis Institute of Health Economics at the University of Pennsylvania, members of PolicyLab at Children’s Hospital of Philadelphia, and run programming for CHOP’s Medical Financial Partnership, which tackles poverty through community-based, cross-sector collaborations with support of the Healthier Together and Possibilities Project initiatives.

The Philadelphia Inquirer is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice. See all of our reporting at