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Asset-Building News Roundup - May 3, 2013

By Veronica Weis on 05/03/2013 @ 06:00 PM

Tags: Recommended Reading


Join us next Thursday in Washington, DC for "A Foot in the Door to the American Dream: A Forum on College Savings Accounts." This lunchtime policy forum is sponsored by CFED & Opportunity Nation. For more information, click here. Can't make it but still want to follow the conversation? We'll be tweeting with #CFEDforum.


Our friends at the Urban Institute released a powerful three-minute video this week explaining just how pervasive the growing racial wealth gap is. It uses CFED's findings in our Upside Down report to illustrate how, despite spending $400 billion on asset-building incentives, the federal government still fails to reach the populations who need support in building wealth and financial security.

Sean Reardon’s op-ed in this past Sunday’s New York Times,No Rich Child Left Behind,” takes a look at how and why educational success gaps between high- and low-income students has steadily increased over the past three decades. The 1:1 Fund's Executive Director, Carl Rist, shares his summary of the piece here.

From the Assets & Opportunity Network

United Way of Greater Houston has launched Tweet My Jobs, Houston a new citywide online jobs platform to help Houstonians find work using innovative technology to combine the popularity of social media and the convenience of a smart phone application. This free service already has more than 150,000 Houston job postings from entry level to senior level corporate positions. Tweet My Jobs, Houston is available at

United Way of Northeast Florida (Real$ense Prosperity Campaign) shared a great tax-time story about Thelma Small, 82 years old, who attended a March tax preparation services in Jacksonville with her daughter.

The Community Action Agency of Southern New Mexico recently published findings from a year-long study from a W.K. Kellogg Foundation grant to explore the feasibility of scaling asset building in rural Doña Ana County. Click here to read their research.

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It's the Economic Mobility, Stupid!

By ThinkProgress on 05/02/2013 @ 04:00 PM

Tags: Economic Inclusion, Recommended Reading

The conservative trickle-down approach to the economy assumes that maximizing rewards for those at the top is the path to both growth and prosperity for the society as a whole. If inequality rises, that does not matter, runs the conservative argument, because absolute levels of prosperity will rise for everyone even if the top gains more.

The progressive approach to the economy is radically different. This approach posits, based on a mass of accumulating evidence, that inequality is not a benign byproduct of growth, but rather a toxic barrier to both middle class prosperity and strong growth in general. In other words, high levels of inequality interfere with the both the quality and quantity of growth experienced by a society. Hence the idea that an economic agenda must concentrate on lifting up the middle class to generate both broadly-shared prosperity and fast growth. The two goals are inextricably linked and one cannot be attained without the other.

Of course, the progressive agenda may be the correct one, but that does not mean it can be easily sold to the public and politicians. It would require a serious reorientation of national priorities and considerable investments in areas like education and infrastructure–spending that is likely to meet considerable resistance in the current environment. Therefore, the question of how to frame the agenda in the political marketplace is key.

One obvious approach is to frame the agenda directly as a means of reducing inequality. Call this the redistributionist approach. This approach is not without merit. Start with awareness of and views about economic inequality.

There is no doubt Americans are aware of rising inequality. In the Pew Research Center’s 2012 American Values survey, respondents were asked if they agreed that today the rich get richer while the poor get poorer. About three-quarters (76 percent) agreed, while just 23 percent disagreed. And the public believes it’s not just the poor who are losing ground to the rich—it’s the middle class as well. In the same survey three-quarters (76 percent) also say the gap between the standards of living of the middle class and the rich grew over the last decade, compared to just 16 percent who think it narrowed.

No wonder that a poll from October 2011 conducted by Pulse Opinion Research for The Hill found that two in three Americans believe that the middle class is now shrinking. And in a Democracy Corps post-2010 election survey, the public endorsed the idea that America is no longer a country with a rising middle class by 57-36. Finally, an October, 2007 poll conducted by political scientists Benjamin Page and Lawrence Jacobs for their book, Class War: What Americans Really Think about Economic Inequality, found 81 percent of the public saying that the gap in wealth between wealthy Americans and the middle class has grown over the last 25 years, compared to just 10 percent who said it has remained the same and 8 percent who said it had gotten smaller.

Of course high awareness of inequality does not necessarily mean that Americans disapprove of it. But further data show that Americans’ high awareness of inequality is indeed matched by high levels of disapproval. For example, in a Pew poll in December, 2011, 61% said our economy unfairly favors wealthy Americans, while only 36% thought the system was “generally fair.” And in an ABC News/The Washington Post poll from January of this year, 55% of Americans said that economic unfairness that favors the wealthy is a bigger problem than overregulation by the government that hurts economic growth. Only 35% of respondents believed the latter was the bigger problem.

Moreover, in an October, 2011 nationwide survey conducted by Greenberg Quinlan Rosner Research and the Center for American Progress Action Fund, the public expressed the following views:

  • 81 percent of those surveyed agreed that “Regular people work harder and harder for less and less, while Wall Street CEOs enjoy bigger bonuses than ever,”
  • 75 percent agreed that “Our economy works for Wall Street CEOs but not for the middle class. America isn’t supposed to only work for the top 1 percent”
  • 72 percent agreed that “right now, 99 percent of Americans only see the rich getting richer and everyone else getting crushed. And they’re right.”

In earlier data from the Page/Jacobs survey, 72 percent agreed that differences in income in America are too large, compared to only 27 percent who disagreed. And 59 percent disagreed that large differences in income are necessary for America’s prosperity. In an October 2008 Gallup poll, 58 percent thought money and wealth should be more evenly distributed among a larger percentage of the people, compared to 37 percent who thought it was fairly distributed.

None of these survey findings are idiosyncratic. Careful academic reviews of public opinion on inequality over time by sociologists Lane Kenworthy and Leslie McCall indicate that Americans have typically been aware of inequality, sensitive to its increase over time and generally disapprove of the levels it has reached on our society.

So, beyond a shadow of a doubt, the public is both aware of rising inequality and disapproves of it. Naturally enough, given these sentiments, the public would also like to see something done about this problem. In a November 2011 poll from the Public Religion Research Institute, 60 percent agreed that “our society would be better off if the distribution of wealth was more equal.” And 63 percent believed that “we need to dramatically reduce inequalities between rich and poor, whites and people of color and men and women.”

But it does not follow from all this–awareness, disapproval and the felt need for action–that the public would necessarily be happiest with a direct attack on inequality as implied by the redistributionist frame. On the contrary, in the February, 2009 Pew economic mobility survey, by an overwhelming 71-21 margin, respondents though it was more important to ensure everyone has a fair chance of improving their economic standing than to reduce inequality in America.

That preference for economic mobility over direct mitigation of inequality is also suggested by results of another question in the same survey. By 71-27, Americans agreed that greater economic inequality means that it is more difficult for those at the bottom of the ladder to move up the ladder. That is what Americans object to most vigorously about economic inequality: that it makes economic mobility more difficult. In other words, for most Americans what we have is not an inequality crisis but a mobility crisis. This is confirmed by results of a recent series of focus groups on inequality conducted by Greenberg Quinlan Rosner. Participants tended not to connect their economic difficulties with wealth and income inequality but bemoaned, more than anything else, the rising cost of middle class expenses like housing, transportation, medical care and college relative to lagging wages and salaries. This middle class squeeze, which prevents them from moving ahead in life, is what primarily concerns them.

The mobility crisis touches something very, very important to Americans. Americans retain a deep faith in their personal ability to get ahead even in adverse circumstances, provided they have a fair opportunity to do so. Here are some results from a survey I helped conduct for the Economic Policy Institute in March, 2006. That poll found that 69% thought they had already attained the American Dream or would attain it in their lifetimes (note: this figure was actually higher–75%–in a CAP poll conducted in February, 2009 after the financial crisis had hit). And while 60% rated themselves between poor and middle class now on a 10 point economic scale (1-5), 59% said they would be between middle class and wealthy (6 to 10) within 10 years. Finally, while 80% described themselves as working class, middle class, or lower class today, 44% believed it was very or somewhat likely that they would become wealthy in the future.

This personal optimism can and does co-exist with negative views about the overall state of the economy. In the EPI poll, respondents were asked whether economic uncertainty and inequality or success in achieving the American Dream characterizes the economy today. Here is the choice posed by the question:

  • Most people today face increasing uncertainty about employment, with stagnant incomes, paying more for health care, taxes, and retirement, while those at the top have booming incomes and lower taxes


  • Our economy faces ups and downs, but most people can expect to better themselves, see rising incomes, find good jobs and provide economic security for their families. The American dream is very much alive.

By 2:1 (64%-32%), respondents selected the first statement about increasing uncertainty as coming closer to their views. But of that group that said that increasing uncertainty, rather than achieving the American Dream, characterized the economy, an amazing 63% nevertheless thought that they themselves would achieve the Dream.

This personal optimism and aspirational outlook is broadly shared across social groups. For example, 69% of the white working class and 74 % of the white middle class believed they have reached or will reach the American Dream, as did 67% of women, 72% of men, 66% of blacks, and 74% of Hispanics (blacks and Hispanics were less likely than whites to believe they had already attained the Dream, but made up for it by being more likely to believe they will attain it in the future).

This aspirational outlook helps explain a stunning finding from the Page/Jacobs survey. A whopping 97 percent agreed (including 85 percent who strongly agreed) that everyone in America should have equal opportunities to get ahead. This is as close to a consensual viewpoint as you find in American public opinion, suggesting the power of a mobility, rather than redistributionist, frame for the progressive economic agenda.

The mobility frame has a strong connection in the public mind to the need for government action. In the 2011 Pew economic mobility survey, an overwhelming 83 percent said they wanted the government to either provide opportunities for the poor and middle class to improve their economic situation or prevent them from falling behind or both. In the same survey, education, a central part of the progressive economic agenda, loomed especially large as a way the government should help provide those opportunities. Ensuring all children get a quality education was rated the highest among options to help people get ahead (88 percent rated it as one of the most important/very important). And improving the quality of elementary and secondary education and making college more affordable were two of the top four options for preventing downward mobility (84 and 80 percent, respectively, one of the most effective/very effective).

Other options that rated highly in this or the 2009 Pew economic mobility survey included promoting job creation, providing basic needs to the very poor, reducing the costs of health care, helping small businesses and business owners, more job training programs and education for adult workers, making it easier to save for retirement and early childhood learning programs. All these mobility-promoting steps are central, of course, to the progressive economic agenda.

In conclusion, the mobility frame lends itself to an “aspirational populism” that makes explicit the argument that current levels of inequality are not just unfair but directly interfere with mobility and economic growth. Not only is there a growing body of economic evidence for the argument but it accords well with the common sense of voters. And perhaps the common sense of an increasing number of politicians. As the President himself has remarked (April, 2012 speech in Florida):

"In this country, prosperity has never trickled down from the wealthy few. Prosperity has always come from the bottom up, from a strong and growing middle class. That’s how a generation who went to college on the GI Bill — including my grandfather — helped build the most prosperous economy that the world has ever known. That’s why a CEO like Henry Ford made a point to pay his workers enough money so that they could buy the cars that they were building. Because he understood, look, there’s no point in me having all this and then nobody can buy my cars. I’ve got to pay my workers enough so that they buy the cars, and that in turn creates more business and more prosperity for everybody."

That about says it all.

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Putting College Back Within Reach

By Jeremie Greer on 05/02/2013 @ 10:00 AM

Tags: Children’s Savings Accounts, Education, Federal Policy

Access to a quality college education has proven to be essential to climbing the economic ladder out of poverty and into the middle class. Unfortunately, runaway tuition and out-of-control student debt have made college an unattainable aspiration for far too many. In a report released earlier this month, the College Board recommends linking two extremely powerful tools for enhancing access to a college education for millions of low income young people: Pell Grants and Children’s Savings Accounts (CSAs).

Tuition image by Bigstock Photo.

For more than 30 years, Pell Grants have made the dream of a college education a reality for millions of low-income young people. As a former Pell Grant recipient, I can personally attest to the power of the Pell grant, which made my own college education possible and positioned me to serve in the capacity I do today. However, rapid growth in the uptake of Pell Grants has caused some to question the fiscal sustainability of this powerfully important program.

So, how can Pell be saved? In its report, “Rethinking Pell Grants,” the College Board recommends the creation of “education accounts” aimed at narrowing the financial and information gaps between low-income youth and young people that grow up under more privileged circumstances.

Here is how the recommendation of the College Board would work:

  1. The federal government would supplement a student’s future Pell Grant by opening an education account for 11- or 12-year-old children who would be eligible for Pell Grants if they were entering college.
  2. The federal government would then make annual deposits equal to 5-10% of the Pell Grant they would receive if they were enrolled in college. These funds would accrue interest until the child is 17 and ready to expend the funds for college.
  3. The funds could only be used to pay college expenses.
  4. Children and parents would receive annual notification of the amount of funds available in their accounts.

The College Board estimates that, if the deposits were equal to 10% of the current average Pell Grant value, at current Pell Grant enrollment levels, the cost of the program would be about $3.7 billion per year. Furthermore, the government would only spend the funds at the point of withdrawal, not when they were credited to the accounts.

As CFED President Andrea Levere often says, “parents will do for their children what they will not do for themselves.” This simple truth has guided CFED’s belief that CSAs are elemental to the economic security and mobility of households, and by extension our country’s economic success. We believe, and research finds, that CSAs can increase college access for low-income individuals and families. Research by Washington University in St. Louis has found that children with college savings accounts in their own names are six times more likely to go to college than children without accounts.

The possibilities evident in these findings have made policymakers at all levels of government take notice. San Francisco’s Kindergarten to College program is pioneering a bold and burgeoning state and local effort to make CSAs widely accessible to all children. More recently, Cuyahoga County, Ohio, announced an effort to open CSAs seeded with $100 for all kindergarteners starting the fall of 2013, while similar initiatives are in planning stages in Colorado and Washington State. Further, Senators Christopher Coons and Marco Rubio have introduced the American Dreams Account Act, which uses existing Department of Education funds to create CSAs for low-income students and to monitor higher education readiness through a personal online savings account.

Bringing together these powerful instruments—Pell Grants and CSAs—has the potential to be a game-changer in the field of college access, and CFED looks forward to working with the College Board to advance these policy recommendations.

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The Best Way to Spend 3 Extra Minutes

By Sean Luechtefeld on 05/01/2013 @ 03:00 PM

Tags: Economic Inclusion

Our friends at the Urban Institute just released this powerful three-minute video explaining just how pervasive the burgeoning racial wealth gap is. It uses CFED's findings in our Upside Down report to illustrate how, despite spending $400 billion on asset-building incentives, the federal government still fails to reach the populations who need support in building wealth and financial security. Seriously, this will likely be the three most powerful minutes you'll spend today.

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CFSI Gathers Market Leaders to Discuss Successful Underbanked Strategies

By Sarah Gordon, Guest Contributor on 05/01/2013 @ 12:30 PM

Tags: Events, Financial Empowerment

Yesterday, the Center for Financial Services Innovation (CFSI) brought together policymakers, regulators, consumer advocates and others to mark the end of Financial Capability Month. The gathering, called Improving Americans’ Financial Capability: Early Lessons and Emerging Innovations for Changing Consumer Behavior, explored the power of combining personalized, timely financial information and advice with high-quality financial products and services.

Given the important role public policy can and should play in fostering an environment where this kind of innovation can flourish, we were pleased to take our conversation to the Hill. Our discussion opened with remarks by Melissa Koide, Deputy Assistant Secretary, Office of Consumer Policy, U.S. Department of the Treasury, and she offered her unique perspective on the state of financial capability in America. The convening was hosted by congressional leaders Rep. Rubén Hinojosa (D-TX) and Rep. Steve Steivers (R-OH), Co-Chairs of the Congressional Financial & Economic Literacy Caucus.

Jeanne Hogarth, Vice President of Policy, CFSI, welcomed a group of distinguished panelists and guests to the event to share insights on a wide variety of interventions impacting financial service providers, regulators, policymakers and funders. Throughout the month, we’ve had the chance to shine a spotlight on innovators who are at the center of the movement to build financial capability around the country.

Jayson Halladay, one of CFSI’s 2010 Financial Capability Innovation Fund grantees, talked about the success of his company, Piggymojo, in using visualization, social commitments, and mobile and online technology to help consumers quantify and enjoy the act of not buying. His comments, along with insights and guidance from the rest of the panelists, offered a fresh view of the financial services market as fertile ground for future innovation.

In fact, promising products and services like Piggymojo are popping up across the country. Representing the best of these efforts, a cohort of nonprofit innovators who were recently awarded a total of $2.5 million through the Financial Capability Innovation Fund II (FCIF II), CFSI’s competitive grant program, discussed their cutting-edge strategies for enabling families to build savings, improve their credit and better manage their finances.

Supporting the evolution of financial capability introduces CFSI to a wide group of innovators. We dig deeper into the current trends of innovation in our recently released report, “Stretch Time: Continuing to Reach for Financial Capability, Trends from the Financial Capability Innovation Fund II.” In the report, we analyze the FCIF II’s high-quality applicant pool, consisting of 127 applications from 38 states and Washington, DC. Highlighting the common features seen in the applications, the results demonstrate widespread adoption of new strategies for building financial capability. We are also excited to see a greater focus on changing consumer behavior and an increased emphasis on sustainability and scalability.

By lifting up successful strategies like those presented on the Hill today and those included in our new report, CFSI seeks to guide and empower others to join us in taking action. Thanks to a remarkable kind of cross-sector collaboration, we are developing a more thorough understanding of consumer needs and ultimately offer a brighter future to all consumers.

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Why I’m Proud to Lead the 1:1 Fund – A Tale of Two Grandfathers

By Carl Rist on 04/30/2013 @ 02:00 PM

Tags: Children's Savings Accounts

EDITOR'S NOTE: This blog post was originally published on the 1:1 Fund's blog and can be read here.

Like many children who grow up in a middle-class household with university-educated parents, I had the notion of going to college drummed into me at an early age. In raising two sons, my wife and I did much the same – making college an important aspiration and setting aside savings to make it a reality. Yet, as much as going to college is a key part of the American Dream, it’s certainly not inevitable or easy. And as anyone who has kids in college knows, it’s a major investment in the future.

What strikes me more as I get older is that, in a nation of immigrants and people seeking to climb the ladder of opportunity, most of us have a story from the present or not too distant past about that person (or scholarship, or philanthropist) who made college a reality for someone important in their lives. For me, it’s the story of two grandfathers growing up in different parts of the world, but whose stories have an uncanny similarity.

My maternal grandfather, Curtis Byrd, grew up in Live Oak, Florida. Raised by a single mom who had to take in boarders to make ends meet, Curtis would have had no chance at attending college had it not been for a local businessman who took an interest in the young man. In a letter dated April 24, 1924, Mr. Hillman, then the vice president of First National Bank in Live Oak writes, “If you need more money to finish your term of school, you may draw on me for the amount.”

At the same time halfway around the world, Albert Rist, my paternal grandfather, was the youngest child in a large peasant farming family in southern Germany. In Albert’s case, it was the local parish priest who took an interest in him and offered to pay, first, the costs of attending the Gymnasium (a German academic high school) in a nearby village and then later college in Tübingen. During college, when my grandfather confessed to the priest that he was really more interested in math than theology, the priest urged him to finish anyway and continued to cover his costs.

Both of these men became the first in their families to graduate from college, and for both, post-secondary education changed the trajectories of their lives and the lives of their descendants. Who is the one person that made college possible in your family? And whom will you help to reach their higher education dreams?

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Homebuyer Education is Critical, Especially in Rural Communities

By Erica Bradley, Guest Contributor on 04/29/2013 @ 01:00 PM

Tags: Housing and Homeownership

Erica Bradley works with the NeighborWorks America Rural Initiative, based in Boston. NeighborWorks America is a national intermediary with a network of 235 organizations serving communities across the country, including approximately 100 rural organizations.

American Home image by Bigstock Photo.

For years, community development professionals were advocates for financial education. Not many lenders, and certainly not customers, took financial education seriously, until the housing bubble burst in 2008. In rural markets, homebuyers typically do not have the same access to services, like homebuyer education. For many rural organizations, expanding their services to include online financial education courses has allowed them to reach more customers.

Tammy Hyman, Homeownership Program Administrator at PathStone, always knew how important homeownership counseling is. PathStone, she said, had offered it since the late ‘90’s. “If they would have done (homeownership counseling) back then, we wouldn’t be having these issues now,” she said of the lenders.

PathStone, which is headquartered in Rochester, serves New York, Vermont, Pennsylvania, New Jersey, Virginia, Ohio, Indiana and parts of Puerto Rico. Many of the markets they serve are rural, and homeownership counseling is offered in Indiana, New York and Pennsylvania.

Hyman said clients have the option of taking an in-person training, which consists of an eight-hour course, or they can take an online course from eHome America. eHome America is a certified provider of online homebuyer education.

For the in-person class, the requirement is an eight- to ten-hour day. Hyman said she tries to include guest speakers, such as real estate agents or lenders. The course is held every other month or sometimes quarterly, depending on the demand for it. Hyman estimates there are 8-18 students in each class.

If the client chooses to take the online course, Hyman said, a staff person schedules a one-on-one call to discuss the course material and answer any questions the client has. Hyman said the benefit to the eHome course is it allows people to take the course at a convenient time for them.

Like PathStone, NHS of Richland County also offers an in-person homebuyer education course as well as the eHome course. NHS of Richland County covers several counties in Southwest Wisconsin, including an area where homebuyer education was not offered.

Linda Smith, NHS of Richland County Homeownership Center Coordinator, said they offer in-person courses, and they attempted to offer distance learning classes. The distance courses were broadcast from the main Richland Center site to remote sites, typically high school classrooms, in neighboring counties. Smith said because broadcasting the course was too staff-intensive, and there were technology problems, the remote course was cancelled. They are now using eHome America for their customers who cannot attend the course in Richland Center, which has gotten a great response. “eHome, because we are rural, is a good fit. It fits the needs for many of our households, especially the younger households who cannot attend classes at night or on the weekends,” she said.

Like PathStone, NHS requires customers who have taken the eHome course to have a phone conference with a staff person.

Gary Throckmorton, eHome Senior Executive Vice President, said eHome’s model is a network of local agencies. “We want the customer to be connected to a local agency. Follow-up is key,” he said. eHome has had steady growth, he said, and approximately 250 agencies are registered with over 36,000 clients served since 2009. Throckmorton expects growth to continue, especially since online education has become more accepted. eHome is currently offered in English and Spanish, but Throckmorton said adding additional languages would be considered if there was a demand.

eHome America was started in May 2009 by Community Ventures Corporation (CVC), a Kentucky-based non-profit. It is endorsed by NeighborWorks America.

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Asset-Building News Roundup - April 26, 2013

By Veronica Weis on 04/26/2013 @ 05:00 PM

Tags: Recommended Reading


For those looking for an Asset Building 101 webinar, register today for "What is Asset Building?" It's being offered on two dates, April 25 & 29, and will share information such as asset-building tools and resources for programs and clients, information about assets as a way to build financial stability for low-income communities of color and more.

What's it like to live on $1.50 a day? Join the Live Below the Line challenge and try it for five days. The initiative is meant to simulate what it’s like for the 1.4 billion people worldwide who live in extreme poverty.

The Center for Financial Services Innovation (CFSI) is hosting an event, "Improving Americans' Financial Capability: Early Lessons and Emerging Innovations for Changing Consumer Behavior" this upcoming Tuesday on Capitol Hill. There's a great list of speakers so make sure you drop by. For more information, click here.


Last week, Hawai`i Governor Abercrombie signed HB 868 into law, eliminating the asset test in the state’s Temporary Assistance for Needy Families (TANF) program, making Hawai`i the seventh state to do so. To read more about this positive development, check out an earlier blog post.

The Consumer Financial Protection Bureau released a new white paper examining payday and deposit advance loans. This study is more comprehensive than almost any other study ever conducted, since the CFPB was able to acquire data on millions of borrowers directly from banks and small dollar lenders. For a full summary and key findings, click here.

From the Assets & Opportunity Network

The Illinois Asset Building Group recently published a blog post that argues that while our student loan system is wrought with deep problems, there are options to allow students to borrow at lower rates and payback their loans easier and safer.

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Hawaii Becomes the Seventh State to Eliminate TANF Asset Test

By Ethan Geiling on 04/26/2013 @ 10:00 AM

Tags: Assets & Opportunity Initiative

Hawaii State Capitol

Last week, Hawai`i Governor Abercrombie signed HB 868 into law, eliminating the asset test in the state’s Temporary Assistance for Needy Families (TANF) program, making Hawai`i the seventh state to do so.

This victory was not easily won. It took years of hard work by assets advocates, service providers, researchers, and policymakers across the state. The idea of lifting asset limits came from a 2008 Hawai`i Alliance for Community-Based Economic Development (HACBED) report, co-authored by CFED, which laid out a policy roadmap for helping families build economic security. The report argued that asset limits are counterproductive and force Hawai`i’s most vulnerable families to sacrifice longer-term savings in exchange for short-term assistance from public benefit programs.

Soon after the policy roadmap was released, policymakers created a state task force to explore strategies to help Hawai`i families climb the economic ladder. The task force, which was staffed by HACBED, took on three issues: asset limits, financial education and children’s savings accounts. The final recommendations from the task force spurred state policymakers to take action. Advocates worked with policymakers to introduce asset limit bills in 2011 and 2012. Although these bills didn’t pass immediately, they helped policymakers further understand the issues with asset limits. Ultimately, the legislature asked the State Department of Human Services to conduct a study examining the potential impact of eliminating the TANF asset test. The study recommended eliminating the asset test, which provided the final push the legislature needed to take the 2013 legislation across the finish line.

Organizations that submitted testimony in support of the legislation, included:

  • Patricia McManaman, Director, Department of Human Services
  • Auli’i George, Office of Hawaiian Affairs
  • Mila Kaahanui, Executive Director, Office of Community Services
  • Brent Kakesako, Hawai'i Alliance for Community-Based Economic Development
  • Hawaii State Commission on the Status of Women
  • Jeanne Y. Ohta, Co-Chair, Women’s Caucus Democratic Party of Hawaii
  • Teresa Bill, Univ. Hawai’i Bridge to Hope Coordinator
  • Laurie A. Temple, American Civil Liberties Union of Hawaii
  • Trisha Kajimura, Social Policy Director, Catholic Charities Hawaii
  • Laura Smith and Scott Fuji, Goodwill Industries of Hawaii, Inc
  • Hawaii Appleseed Center for Law and Economic Justice
  • Nalani Fujimori Kaina, Legal Aid Society of Hawaii
  • Ann Freed, Hawaii Women’s Coalition
  • Betty Sestak, AAUW-Windward
  • Robert Scott Wall, Community Alliance for Mental Health

Hawaii is the seventh state to eliminate the asset test in TANF. The other six states to eliminate the test are Colorado (2011), Maryland (2010), Alabama (2009), Louisiana (2009), Virginia (2003), Ohio (1997). Click here to learn more about asset limits in public benefit programs.

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CFPB Releases New Payday Research

By Ethan Geiling and Katherine Lucas McKay on 04/25/2013 @ 12:00 PM

Tags: Assets & Opportunity Initiative, Federal Policy

Yesterday, the Consumer Financial Protection Bureau released a new white paper examining payday and deposit advance loans. The paper found that most borrowers are not using payday loans for short-term needs (as the payday industry often claims), but instead are repeatedly rolling over loans and taking out additional loans. As a result, borrowers often become stuck in an expensive and financially disastrous cycle of debt. The CFPB found that nearly half of payday borrowers have more than 10 loans a year, while 14 percent undertook 20 or more transactions annually.

This study is more comprehensive than almost any other study ever conducted, since the CFPB was able to acquire data on millions of borrowers directly from banks and small dollar lenders.

In a press release, CFPB Directory Richard Cordray explained: “This comprehensive study shows that payday and deposit advance loans put many consumers at risk of turning what is supposed to be a short-term, emergency loan into a long-term, expensive debt burden. For too many consumers, payday and deposit advance loans are debt traps that cause them to be living their lives off money borrowed at huge interest rates.”

The paper indicates that the Bureau is very concerned with current industry practices. The Bureau plans to conduct additional research and analysis, looking at online payday lending, the effectiveness of state restrictions on payday lending, and consumers’ motivations for borrowing. The report concludes that consumers need additional protections in this market and that the Bureau intends to use its authority to implement new protections once its research is complete. Even though, by law, the CFPB cannot set rate interest rate caps (the gold standard policy), there is much the Bureau still can do to protect consumers.

The Bureau’s interest in investigating payday borrowers’ experiences provides an important opportunity for asset builders to bring attention to the financial instability that results when predatory loans lead consumers into cycles of debt. This opportunity comes as asset-building advocates have worked for years to implement better consumer protections at the state and local levels. In fact, Twenty-five states currently have pending legislation addressing predatory small dollar lending. And the Assets & Opportunity Network recently released a 2013 Network Federal Policy Agenda, outlining the key policy issues that are most important to Network members. The number one issue on the agenda is educating the CFPB on predatory small dollar lending and other consumer issues. A few weeks ago, Network members weighed in with their recommendations on how the CFPB could curb predatory lending, which will become the basis for a statement and comments to the CFPB in the coming weeks.

Click here to read the full CFPB paper. Other key findings from the report are below.

Key Findings: Payday and Deposit Advance Loans Can Become Debt Traps for Consumers

The report found many consumers repeatedly roll over their payday and deposit advance loans or take out additional loans; often a short time after the previous one was repaid. This means that a sizable share of consumers end up in cycles of repeated borrowing and incur significant costs over time. The study also confirmed that these loans are quite expensive and not suitable for sustained use. Specifically, the study found limited underwriting and the single payment structure of the loans may contribute to trapping consumers in debt.

Loose Lending: Lenders often do not take a borrower’s ability to repay into consideration when making a loan. Instead, they may rely on ensuring they are one of the first in line to be repaid from a borrower’s income. For the consumer, this means there may not be sufficient funds after paying off the loan for expenses such as for their rent or groceries – leading them to return to the bank or payday lender for more money.

  • Payday: Eligibility to qualify for a payday loan usually requires proper identification, proof of income, and a personal checking account. No collateral is held for the loan, although the borrower does provide the lender with a personal check or authorization to debit her checking account for repayment. Credit score and financial obligations are generally not taken in to account.
  • Deposit Advance: Depository institutions have various eligibility rules for their customers, who generally already have checking accounts with them. The borrower authorizes the bank to claim repayment as soon as the next qualifying electronic deposit is received. Typically, though, a customer’s ability to repay the loan outside of other debts and ordinary living expenses is not taken into account.

Risky Loan Structures: The risk posed by the loose underwriting is compounded by some of the features of payday and deposit advance loans, particularly the rapid repayment structure. Paying back a lump sum when a consumer’s next paycheck or other deposit arrives can be difficult for an already cash-strapped consumer, leading them to take out another loan.

  • Payday: Payday loans typically must be repaid in full when the borrower’s next paycheck or other income is due. The report finds the median loan term to be just 14 days.
  • Deposit Advance: There is not a fixed due date with a deposit advance. Instead, the bank will repay itself from the next qualifying electronic deposit into the borrower’s account. The report finds that deposit advance “episodes,” which may include multiple advances, have a median duration of 12 days.

High Costs: Both payday loans and deposit advances are designed for short-term use and can have very high costs. These high costs can add up – on top of the already existing loans that a consumer is taking on.

  • Payday: Fees for storefront payday loans generally range from $10-$20 per $100 borrowed. For the typical loan of $350, for example, the median $15 fee per $100 would mean that the borrower must come up with more than $400 in just two weeks. A loan outstanding for two weeks with a $15 fee per $100 has an Annual Percentage Rate (APR) of 391 percent.
  • Deposit Advance: Fees generally are about $10 per $100 borrowed. For a deposit advance with a $10 fee per $100 borrowed on a 12-day loan, for example, the APR would be 304 percent.

Sustained Use: The loose underwriting, the rapid repayment requirement, and the high costs all may contribute to turning a short-term loan into a very expensive, long-term loan. For consumers, it is unclear whether they fully appreciate the risk that they may end up using these products much longer than the original term. Or, that they may end up paying fees that equal or exceed the amount they borrowed, leading them into a revolving door of debt.

  • Payday: For payday borrowers, nearly half have more than 10 transactions a year, while 14 percent undertook 20 or more transactions annually. Payday borrowers are indebted a median of 55 percent (or 199 days) of the year. For the majority of payday borrowers, new loans are most frequently taken on the same day a previous loan is closed, or shortly thereafter.
  • Deposit Advance: More than half of all users borrow more than $3,000 per year while 14 percent borrow more than $9,000 per year. These borrowers typically have an outstanding balance at least 9 months of the year and typically are indebted more than 40 percent of the year. And while these products are sometimes described as a way to avoid the high cost of overdraft fees, 65 percent of deposit advance users incur such fees. The heaviest deposit advance borrowers accrue the most overdraft fees.

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Today is Teach Children to Save Day

By Veronica Weis on 04/23/2013 @ 10:00 AM

Tags: Children's Savings Accounts, Financial Empowerment

Today is Teach Children to Save Day, a national program of the American Bankers Association that organizes banker volunteers to help young people develop a savings habit early in life. Since the program started in 1997, some 123,000 bankers have taught savings skills to more than 5 millions students. This year, over 10,000 bankers in 49 states are taking part in this nationwide effort to improve financial literacy.

As part of our commitment to improve financial literacy and teach kids how to save for their economic futures, we launched the 1:1 Fund, a social enterprise and online community that promotes educational opportunity for low-income students. Leveraging the power of social media, the 1:1 Fund connects low-income students with individual donors who match the savings of these students in qualified child savings accounts (CSAs).

Just in time for Teach Children to Save Day, Need to Know on PBS correspondent Stacey Tisdale traveled to Mississippi to examine the Mississippi College Savings Account Program (MS CSA) designed to help low-income, mostly African-American children save for college – and teach them about banking and money along the way. You can learn more about the MS College Savings Account Program on the 1:1 Fund's website and by watching the video below.

Watch Financial literacy on PBS. See more from Need To Know.

We'll be tweeting today using #TCTS2013 and if you're interested in participating in this important conversation, we've included ways to get involved below.

Ways to Engage:

  • Start by watching the video and share Friday’s episode of Need to Know on Twitter by clicking here.
  • Want to help the College Savings Accounts of the Mississippi kids grow? Provide matching donations through the 1:1 Fund.
  • Follow the @ababankingnews Twitter account and use the hashtags #TCTS2013 and #FinLitMonth in any Teach Children to Save Day or financial education-related posts by adding them at the end of each posting.
  • Search the hash tags #TCTS2013 and #FinLitMonth to find other opportunities to engage in conversations around financial literacy month and Teach Children to Save Day.
  • Finally, use the comments section below to share your thoughts on CSAs. Thanks for keeping the conversation going!

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We Got 99 Problems...

By Daria Sheehan, Citi Foundation, Pamela Chan and Ethan Geiling on 04/22/2013 @ 04:45 PM

Tags: Behavioral Economics, Economic Inclusion, Financial Empowerment

Insights from behavioral economics can transform the way we design programs in the asset-building field, and we’re interested in learning how. That’s why CFED, ideas42 and the Citi Foundation launched the Behavioral Economics Technical Assistance (BETA) Project and issued a request for proposals (RFP) in late 2012 from organizations interested in piloting behaviorally-informed interventions. Working with the selected pilot sites, we hope to also develop technical assistance tools for other organizations in the field.

Through the RFP process, we received 99 proposals from organizations across the country. Today, we released a brief that examines themes among these 99 proposals, explores common challenges and lays out next steps for the BETA Project.

With 99 applications from a diverse set of organizations, you might expect an infinite range of different problems and program challenges. Interestingly, we found that many of the problems organizations reported are quite similar. Almost all of the problems fell into four broad categories:

  1. Low take-up of a program or service. For example, many programs offer financial education classes or credit counseling, but have problems convincing individuals to enroll in these programs.
  2. Clients fail to follow through on intentions. For example, many programs work with individuals to create “action plans” or similar roadmaps to help people achieve their financial goals. Yet individuals do not follow through on these plans.
  3. Clients have trouble prioritizing savings or changing savings habits. For example, some organizations were interested in leveraging tax time to help people save, since individuals often get a windfall tax refund.
  4. Clients have difficulty making economically beneficial financial decisions. For example, many organizations are trying to help individuals manage and repair credit, usually through one-on-one financial counseling.

Although many of the problems identified in the proposals were similar, we believe that the underlying reasons why these problems exist could be very different for each organization.

For example, take the problem of getting more people to sign up for a financial education class. If the class has a good curriculum, and has led to successful outcomes, why is it hard to get people to sign up?

It’s easy to assume that the underlying reason for this problem is about the advertising and promotion of the program, and that if more people knew about the program, more would sign up. However, the reality could be that people know about the program and had the intention to sign up, but did not act upon it. In this case, it would not matter how effective a new advertising campaign is—the problem was not the advertisements.

All behaviorally informed interventions start with a statement of the problem. Over the coming months, the BETA Project will share lessons from our three selected test sites: Neighborhood Trust Financial Partners (New York), Cleveland Housing Network (Cleveland) and Accion Texas (San Antonio). We’ll start by analyzing the original problem statement provided by each of the sites in their application:

Designing effective solutions ultimately depends on how we represent the problems. That means that we must disentangle the core challenge from preconceptions or hidden assumptions. Stay tuned for lessons on how we take these original problem statements and refine them into the core challenges that can be addressed by behavioral diagnosis and design.

By sharing insights from these sites, we hope more organizations will come to appreciate how accounting for client behavior in the context of service delivery can greatly impact program outcomes.

Click here to read the full brief.

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Children’s Savings Conversation Hits National Airwaves

By Kristin Lawton on 04/22/2013 @ 01:00 PM

Tags: Children’s Savings Accounts, Financial Empowerment, Matched Savings

If you subscribe to our mailing list, you got word late last week that Friday’s episode of WNET’s Need to Know would feature the Mississippi College Savings Account Program, one of the 1:1 Fund’s two pilot programs and one of two innovative children's savings programs designed by CFED with support from the W.K. Kellogg Foundation.

Now, the reviews are in. Consensus: the 13-minute segment was a powerful testament to the power of Children’s Savings Accounts (CSAs) and the importance of starting children early on the path towards higher education and long-term financial well-being.

Watch Financial literacy on PBS. See more from Need To Know.

Need to Know traveled to Mississippi to showcase the Mississippi College Savings Program and its partners, W. K. Kellogg Foundation, Delta State University and Hope Credit Union, but momentum for wide-scale adoption of CSA programs is building across the country with many other organizations, cities, state houses and in federal agencies working to make aspirations to go to college a reality for all students, regardless of the ZIP code into which they were born.

Just how deep is the impact of CSAs? As the Need to Know segment indicates, children with savings accounts in their names are six times more likely to go to college than those without accounts. And, this finding controls for factors like race and household income, meaning that children are more likely to go to college if they have an account in their name even if other demographic measures would predict a low propensity for college enrollment. In other words, the power of having a savings account isn’t about how much money is in it, but rather, about how it informs a child’s aspirations.

Without a doubt, we stand on the brink of an important mindset shift. People who understand just how powerful CSAs are will inevitably support them; the question is how we promote that understanding among the public at large. Friday’s episode of Need to Know does exactly that.

Of course, you can help. Start by watching the video and share Friday’s episode of Need to Know on Twitter by clicking here. Want to help the College Savings Accounts of the Mississippi kids grow? Provide matching donations through the 1:1 Fund. Finally, use the comments section below to share your thoughts on CSAs. Thanks for keeping the conversation going!

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Asset-Building News Roundup - April 19, 2013

By Veronica Weis on 04/19/2013 @ 05:00 PM

Tags: Recommended Reading


The UW-Madison Center for Financial Security and the University of Wisconsin-Extension, Cooperative Extension, are pleased to announce the 2013 Pathways Conference Financial Security over the Life Course, taking place online the week of June 3-7, 2013. The conference planning committee has organized a program that aims to inform your work and provide new ideas and resources related to family financial security.

To mark Financial Literacy Month, tonight's episode of WNET's Need to Know, which airs nationally on PBS, will offer a thoughtful account on the Mississippi College Savings Account Program, an innovative collaboration between CFED, the Center for Community Economic Development at Delta State University, the Mississippi Community Financial Access Coalition and Hope Credit Union, with support from the W.K. Kellogg Foundation. The episode chronicles a single mother of three-year-old twin girls who are saving for college with the help of the Mississippi CSA program, supported by the new 1:1 Fund. To watch the full episode online, visit the Need to Know website later this evening. To watch on television, check your local listings.

June 5-7, 2013 participate in the 8th Annual Underbanked Financial Services Forum, the country’s only conference that brings together bank and credit union executives, technology entrepreneurs, retailers, investors, regulators, nonprofit providers, and consumer advocates to discuss market opportunities for advancing innovative efforts and reaching the financially underserved. Presented by the Center for Financial Services Innovation (CFSI) and SourceMedia, the publisher of American Banker, the Forum provides an opportunity for organizations to share their successes and challenges in the underbanked marketplace. Register now to attend the Forum.


A new guide by the Insight Center for Community Economic Development, Measuring Up: Aspirations for Economic Security in the 21st Century, shares innovations for measuring economic security via poverty measures.

Next Tuesday is Teach Children to Save Day, a national program of the American Bankers Association that organizes banker volunteers to help young people develop a savings habit early in life. Since the program started in 1997, some 123,000 bankers have taught savings skills to more than 5 millions students.

A bill sponsored by North Carolina State Representative Nathan Ramsey seeks to increase the supply of affordable housing by creating restrictions that say that counties cannot adopt or enforce zoning regulations that exclude manufactured homes from being located on individual lots in areas zoned for single-family residential use.

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Five Lessons for Piloting Integrated Service Delivery

By Kori Hattemer on 04/18/2013 @ 12:00 PM

Tags: Assets & Opportunity Initiative, Financial Empowerment, Integrated Service Delivery

Integrated service delivery is a promising model for creating pathways to financial security. FEGS Health & Human Services in New York City and Solid Ground in Seattle are two of the innovative organizations exploring strategies for integrating financial empowerment services into their existing social service delivery. These organizations have launched pilots to test their integration plans, which have produced key takeaways for other organizations interested in this type of work.

FEGS has integrated a conversation about savings and referral to the NYC OFE Financial Empowerment Centers and SafeStart Account into the post-employment retention counseling their clients receive after they are placed in new jobs. Solid Ground, a Community Action Agency, is training their housing case managers to provide financial coaching to clients. Below are five findings from the pilot experiences of FEGS and Solid Ground.

  1. Get staff buy-in early, as it is critical to the success and expansion of integration pilot projects. Solid Ground used a small pilot to create support for financial coaching among their staff, from leadership to frontline case managers. They also organized a lunchtime learning opportunity for staff and drafted a one-pager to introduce the new project to staff members. FEGS also sought support and input from frontline staff and program managers, taking their challenges and concerns into consideration as they made adjustments to the pilot project.
  2. Define desired outcomes early in the process, and identify and track evaluation metrics to help measure progress. Taking time at the outset to ask and answer the question, “What will success look like?” is essential to understanding whether and how an intervention is making a difference, and what indicators should be tracked in order to make that determination. Measuring outcomes during the pilot phase provides important evidence and insight that will be key to expanding integration efforts in the future. Concrete outcome measurements also will help create support for the program to internal and external stakeholders.
  3. Make the connection between financial empowerment outcomes and programmatic outcomes. Financial empowerment metrics might include measures such as amount of money saved, improved credit scores, reduced debt and improved budgeting techniques, just to name a few—and all of these can be linked to social service outcomes. For example, clients in FEGS’ post-employment counseling program may struggle to retain a job if the car they use to get to work breaks down and they do not have an emergency fund to pay for repairs. Addressing this financial barrier can actually improve FEGS’ programmatic outcomes (e.g., the number of employees who are able to retain new jobs for at least six months).
  4. Provide financial coaching to staff. Staff members are more likely to deliver financial empowerment services and refer clients to other resources if they have a deeper understanding of the services that are available. In addition, frontline social service agency staff members—who themselves may be struggling to make ends meet—sometimes feel uncomfortable talking with clients about budgeting and money if they do not feel confident managing their own finances.
  5. Equip staff appropriately to deliver the pilot program. Staff members need tools (e.g., scripts, worksheets and tip sheets) and training when delivering a new program of this nature. Both Solid Ground and FEGS asked frontline staff members what tools and information they would need to deliver the pilot and found that staff had a wide range of needs, which tended to vary according to staff experience and expectations.

See this recently published brief for more information about these organizations’ innovative integration work and the lessons they have learned so far.

These organizations participated in an Intensive Learning Cluster convened by CFED and supported by the Bank of America Charitable Foundation. Click here for more information about this Intensive Learning Cluster.

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How to Increase Financial Capability Among Disadvantaged Youth

By Sean Luechtefeld on 04/17/2013 @ 12:00 PM

Tags: Financial Empowerment

Last month, our colleagues at the Center for Community Development Investments at the Federal Reserve Bank released a Working Paper highlighting the success and promise of MY Path, an initiative that provides disadvantaged youth with peer‐led financial capability trainings, a savings account at a mainstream financial institution and incentives to set and meet savings goals. The paper, Increasing Financial Capability among Economically Vulnerable Youth: MY Path, shows how MY Path’s powerful outcomes relate to academic writings on the topic of youth savings, and in particular, how financial capability initiatives are uniquely promising interventions to provide economic opportunities to low-income, working youth.

Initial findings show that MY Path is an innovative and promising model for empowering disadvantaged youth. According to the report, early results find that:

  • Participants saved an average of $507 over a six‐month period. Including incentives, each youth had accumulated an average of $735 though MY Path.
  • Participants saved an average of 86% of their savings goal, and 46% fully met their savings goal.
  • There were increases in confidence about making financial decisions and comfort in doing business with a mainstream financial institution.

How do these findings inform your programs? Read the Working Paper and let us know what you think!

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April is Fair Housing Month

By Doug Ryan on 04/16/2013 @ 04:00 PM

April is Fair Housing Month. This year marks the 45th anniversary of the Fair Housing Act. As readers know, the Act makes it illegal to discriminate in the sale, financing or rental of housing based on the protected classes of race, color, sex, religion, national origin, familial status or disability. But the purpose of the law is much broader than halting discrimination.

The Act was passed in the immediate aftermath of the assassination of Martin Luther King, Jr. While the letter of the law speaks to prevention and enforcement, the spirit of the law, indeed the legislative intent of the law, is open housing. Quite simply, open housing laws would open the front door to housing opportunities long off limits to people because of their race, color, religion or other characteristics. In essence, fair housing laws offered new housing options. You can get a sense of this from President Lyndon B. Johnson’s statement upon signing the law, which was formally titled the Civil Rights Act of 1968.

So what does this have to do with CFED’s goal of expanding affordable housing?

CFED’s major homeownership initiative, the Innovations in Manufactured Housing (I’M HOME) initiative, aims to mainstream manufactured housing finance and policy. Income and wealth are not protected classes, and there is no legal right to a mortgage. But the recent housing crisis has taught us that misleading lending practices and unfair loan terms, including unnecessarily high interest rates, undercut communities and compromise the ability to meaningfully extend homeownership, which for most Americans is the key to wealth building and financial security.

CFED and its partners have documented that purchasers of manufactured housing are often offered different, and in many ways unfair, loan products. Most manufactured housing loans are chattel, or personal property, loans, similar to car loans. Various factors, such as state laws, help explain this. The relationship between manufactured home dealers and financial companies is another part of it. Chattel loans can have rates as much as nine percent higher than a mortgage, and we have learned far too vividly that higher interest rates can lead to higher delinquency and default rates. A mortgage would be a better deal for a homeowner if it was affordable or even available.

Certainly, some state laws need to change to expand the universe of manufactured home owners eligible for mortgages. However, many borrowers who may be eligible for mortgages do not get to consider them. Banks, state Housing Finance Agencies, and the GSEs, Fannie Mae and Freddie Mac, can change internal practices and procedures to extend mortgage opportunities to worthy buyers of manufactured homes. Federal regulators can also help make the mortgage environment fairer and more accessible to potential manufactured home buyers. One of CFED’s major objectives in its I’M HOME strategy is to make lending to this underserved mortgage market a greater part of lenders’ business models.

A new CFED report, Toward a Sustainable and Responsible Expansion of Affordable Mortgages for Manufactured Homes, makes clear that manufactured housing loans can be made responsibly, particularly to low- and moderate-income buyers, the same demographic that was too often exploited by dishonest or simply reckless lending practices in the run up to the housing crash. The report demonstrates that mortgages to buyers of manufactured home can perform as well, and perhaps better, as the mortgages many lenders are already making.

There are plenty of examples of which policy and business practices work and which do not. The challenge for affordable housing advocates is to help CFED and its local and state partners better integrate manufactured housing into local planning, state laws and lenders’ portfolios. CFED is working to promote best practices and enhance its already robust toolkit for advocates.

Jurisdictions and other entities that receive federal housing dollars must demonstrate that they are affirmatively promoting fair housing through their planning and program activities. Depository institutions must comply with the Community Reinvestment Act and show how they offer credit and financial services to qualified low- and moderate-income households. Members of the Federal Home Loan Bank system have access to two programs, the Affordable Housing Program and the Community Investment Program, which are, broadly, designed to provide funds to underserved markets.

Each of these tools can be used to promote fair housing, economically integrate communities and meet local goals such as workforce housing and wider tax bases. Expanding homeownership through products such as manufactured housing mortgages can complement the tools already available to lenders and communities.

Broader and better mortgage lending is, at its core, fair housing. CFED looks forward to expanding its homeownership work across the country to help further the spirit of the Fair Housing Act.

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From Saver to Homeowner: Shannon Fox's Story

By Bank of the West on 04/15/2013 @ 03:30 PM

Tags: Individual Development Accounts, Housing and Homeownership

To help families achieve the goal of homeownership, Bank of the West has partnered with CFED to match the money that low-income individuals save for a down payment and to support the nonprofits that provide financial education to these savers. As part of Financial Literacy Month in April, this is the second story in a three-part series featuring Individual Development Account (IDA) program graduates from across the country.

For Shannon Fox, buying her first home was scary, exciting, and sometimes frustrating. “I thought I would never find anything in my price range,” she says. Eventually, Shannon opened an Individual Development Account through Home Forward and says, “Their encouragement gave me hope that maybe I can become a homeowner, something I thought would never be possible for me being a single woman and living in the great Northwest where prices for homes are a little more expensive than elsewhere.” In addition to the support from Home Forward, Shannon found that the homebuying class gave her knowledge and confidence she would not otherwise have had.

Still, the process wasn’t always easy. Shannon found that the paperwork associated with buying a home felt difficult and overwhelming. Reflecting on the experience, she relates, “I learned that dreams, like buying my own home, can come true if you save up for them. It was a long process, so it takes patience, but it was definitely worth it. I love my new home!”

Shannon says that given the opportunity, she would save using an Individual Development Account again in a heartbeat. To others, she shares the advice that helped her succeed: “Stick with it! Don't give up! Be patient, and your dream of owning a home can come true too, like it did for me.”

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Stories of Saver Success: The Holloways

By Michael Chasnow on 04/12/2013 @ 12:00 PM

Tags: Childrens Savings Accounts, Matched Savings

Several weeks ago, I was fortunate to have a great conversation with Tricia Holloway, a proud parent of a first-grader in the San Francisco Unified School District. We spoke for half an hour about her and her daughter’s experience with Kindergarten to College (K2C), a program that gives every SFUSD kindergartner a college savings account, seeded with $50 by the City of San Francisco.

Below are some highlights from our conversation, which I found insightful practically, as I learned about the day-to-day decisions Tricia and her husband Don make to save and prepare their daughter for college, and inspiring, as I considered the impact that similar family commitments could have for families across San Francisco (and beyond!) on college attainment and economic opportunity.

How long has your family been in San Francisco?

My husband is a San Francisco native, and I have been here since 2004. I moved to California in 1984 for college and never left! We plan to raise our daughter and family here in SF.

How did you hear about the Kindergarten to College program?

I actually heard about the program when I was first registering my daughter for kindergarten at her new school. I thought it sounded too good to be true, a free college savings account with a $50 deposit and ability to earn matching funds, but I was so thrilled to learn that it was real.

What was your strategy for saving?

My husband I wanted to get in the habit of saving for college early, and we wanted to make it easy, something we did not need to think about all the time. So, we set up a direct deposit with my husband’s employer.

Times are tight, so we started small, saving $5 a month. When my husband got a small salary increase recently, we decided to bump up the amount we save, so we upped the monthly direct deposit to $11. We know it’s not a huge amount, but it feels good, and it will add up.

Do you talk about the college savings account with your daughter?

We actually don’t speak a lot about the college savings account, or the cost of college. My husband I do not want finances to be a constraint on our child’s dreams.

That said, we talk about college and the future all the time. Our daughter is a first-grader now, and recently she came home complaining about how hard multiplication tables are. We told her that it’s important to study and focus, because this is what she will need to do in college and in the future. Also, my husband often talks with our daughter about how college creates better opportunities in life.

Do you have any advice for other K2C parents?

College seems far off, but start saving now! Make it easy for yourself and your family to save—set up direct deposit so you do not need to think about making the deposit every week or month.

Also, talk often about college and getting prepared with your child. Saving for and talking about college help create that expectation for your child. For instance, if I am talking to my daughter about a friend of mine, I mention that we met in college, and that she will go to college one day too.

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