Cities Are a Hub of CSA Activity and Innovation
By Kamolika Das on 02/21/2017 @ 09:00 AM
Cities have been a hub of Children’s Savings Account (CSA) innovation, starting with San Francisco’s launch of the first universal, municipal CSA program, Kindergarten to College, which inspired the creation of many other city and state level programs. City leaders are increasingly pushing for CSAs as a strategy to promote higher education and economic development within their communities. Existing CSA programs serve a total of less than half a million children nationwide, so engaging cities with large numbers of children is a promising way to ramp up the impact of CSAs. Recently, municipal leaders in three cities – Los Angeles, CA, Milwaukee, WI, and Richmond, VA – have been thinking through policy questions and program design details for their respective CSA programs.
Los Angeles is exploring creating a CSA program for the nation’s second-largest school district, Los Angeles Unified School District (LAUSD). Last year, the Los Angeles City Council instructed the City Administrative Officer, with the assistance of the Chief Legislative Analyst and City Attorney to review the feasibility and economic impacts of establishing a CSA program for the Los Angeles Unified School District’s (LAUSD) approximately 72,000 kindergartners. The city is in the process of determining a final cost estimate for the program, which would be the largest running municipal-level CSA program. Champions of the program are confident that it would help narrow gaps in college participation between children from higher and lower-income families and increase economic opportunity for all Angelenos.
City leaders in Milwaukee are developing a citywide CSA program to increase educational attainment among the city’s youth and ensure that Milwaukee has a skilled workforce prepared for 21st century jobs. The idea was first proposed in 2014 by Mayor Tom Barrett as part of his economic development strategy for the city, Growing Prosperity: An Action Agenda for Economic Development. The City of Milwaukee has made great efforts to include stakeholders from across the city in the CSA design working group, including financial service providers, community groups, philanthropic organizations and education leaders. The Milwaukee CSA program is expected to launch in the 2017-2018 school year, starting with Milwaukee Public Schools (MPS) kindergartners and eventually expanding to charter, private, choice, and home school students.
Most recently, municipal leadership in Richmond has also been exploring the concept of CSAs. Richmond’s new Director of the Office of Community Wealth Building, Reggie Gordon, has been building partnerships with the Superintendent of Richmond Public Schools and the Richmond Public Schools Education Foundation to collaboratively think through what a CSA program would look like in Richmond. Discussions are at an early stage, but the joint interest demonstrates that the impact of CSAs cuts across a number of policy areas from K-12 and higher education to anti-poverty measures and workforce development.
The number of cities that are beginning to learn from one another and explore CSAs as a path to financial opportunity is heartening. Eventually, as more states begin to pursue statewide CSA programs, municipal leaders may need to think strategically with state policymakers about combining the programs or even rolling them into a national CSA program – but for now, we can celebrate the new initiatives underway.
CSAs and ESAs Are More Different Than the Words Suggest
By Monica Copeland on 02/13/2017 @ 01:00 PM
We have recently observed an uptick in news stories and legislation about Education Savings Accounts (ESAs), which are individual flexible use accounts funded by states for families’ private educational expenses. ESA legislation has been adopted in five states since 2011. As many as 18 states introduced ESA legislation in 2016, and North Dakota and New Hampshire are currently considering ESA bills. Given the new Secretary of Education Betsy DeVos’ support for school voucher programs, tax credits and ESAs, we expect to see continued discussion of this policy. The growth of ESAs poses a challenge for the Children’s Savings Account (CSA) field, since though the names sound very similar, the goals are completely different.
How are ESAs different from CSAs?
As described in a previous blog, ESAs and CSAs have at least four fundamental differences.
- ESAs are not really savings accounts. ESAs are flexible spending accounts which allow families who have opted out of public education to use public funds to pay for expenses such as tuition and fees at private or parochial schools, home schooling, tutoring or online courses.
- ESAs are not about post-secondary education. Unlike CSAs, whose proceeds are primarily designated for investing in post-secondary education, ESAs pay for primary and secondary education expenses.
- ESAs provide no incentives for parents to actively contribute to the account. A fundamental feature of CSAs is that they offer savings incentives that encourage accountholders to save and build wealth in their accounts. ESAs offer none of these features.
- ESAs have few, if any, progressive features. With the exception of addressing a few unique populations, ESAs are not addressing gaps in wealth. An important feature of many CSAs is a progressive incentive structure that provides greater incentives for low- and moderate-income savers. In this way, greater benefits are directed toward those with less means.
Why is this an issue for our field?
The risk for our field is that as we advocate for CSA policies, they may get confused or conflated with ESA policies. For example, there is the potential for this confusion in New Hampshire, which currently has both CSA and ESA legislation pending. Calling what is essentially a voucher policy an “Education Savings Account” contributes further to the confusion, since it implies that families are putting savings into the accounts when they are not.
As we continue to promote the expansion of CSAs at the local, state and federal levels, we will keep a close eye on this issue. We encourage our partners and advocates to help raise awareness of the differences between these policies and make sure there isn’t confusion as you develop CSA programs in your communities. To learn more about CSA policies visit savingsforkids.org.
Children’s Savings Victories on the Horizon in Three States
By Kamolika Das on 02/03/2017 @ 03:00 PM
While the federal education policy landscape is still unclear, we are excited about the leadership of three state policymakers championing Children’s Savings Accounts (CSA) and college access. More than 10 states currently have long-term asset-building accounts for children in operation, and others are in the process of rolling out or funding their programs.
Recently elected Pennsylvania Treasurer Joe Torsella, newly elected Oregon Treasurer Tobias Read and California Assemblymember Adrin Nazarian are all taking leadership as champions for expanding financial security for all populations in their respective states, especially through increased education opportunities for children.
In Oregon, Treasurer Tobias Read has long been dedicated to education initiatives, as demonstrated by his work on full-day kindergarten and support for expanding eligibility to Oregon Promise grants and increasing services for Oregon Promise grantees. During his campaign, Read also committed to supporting Career and Technical Education programs, Early College Credit programs and Dropout Prevention Strategies.
The Oregon Asset Building Coalition has designed a CSA program and identified best practices to ensure that it is inclusive and accessible, especially for low- and moderate-income families. Treasurer Read’s involvement will be critical in helping to generate enthusiasm among Oregon policymakers and bring Oregon’s children one step closer to educational and financial success.
Similarly, Pennsylvania Treasurer Joe Torsella campaigned on the promise of creating economic opportunity for the state’s most vulnerable residents. As a symbol of his priorities, he was sworn in at Camp Curtin Academy, a public middle school in Harrisburg. He states, “This is a common sense, centrist idea that both parties should agree on…. It’s about raising expectations and results, and it’s about the economy of Pennsylvania.” Torsella has made this an early priority and under his direction, we are hopeful about seeing Keystone College Savings Accounts come to fruition.
In California, Assemblymember Adrin Nazarian has introduced a bill to establish a CSA program for the half-million children born in the state each year. He is working closely with stakeholders from across the state to shape the design of the program to ensure more children have an opportunity to get to and through college. As the bill language is developed, this could be an incredible addition to the commitment that several cities in California have already made to CSA programs.
CFED is optimistic that the examples above reflect progress in how state and local governments are partnering together and learning from one another. While we await policy changes at the federal level, we can take some solace in leaders at the state and local level who are finding innovative solutions to improve educational and financial outcomes for children across the economic spectrum.
How Executive Action Can Help Expand Children’s Savings Programs
By Shira Markoff on 01/27/2017 @ 09:00 AM
As we’ve discussed previously on this blog and in other CFED publications, Children’s Savings Account (CSA) programs have proliferated across the country over the past several years. As of the end of 2016, 42 programs—ranging in size from small community-based programs to universal statewide programs—were serving nearly 313,000 children. With growing interest and momentum across the country, CSAs are poised to scale significantly and reach hundreds of thousands more children over the next few years. However, this expansion may be thwarted by the lack of a turn-key account platform that meets the needs of cities and states designing programs. While some programs have developed workarounds, for other would-be programs, the challenge of finding a financial services provider willing to work with them to create an appropriate savings vehicle is too big to overcome.
Working with other organizations in the field, we have developed a proposal for actions the presidential administration could take to address this challenge. As described in Administrative Actions to Close the Ever-Growing Gap, the U.S. Treasury Department could create a low-cost, easy-to-access account platform for CSA programs called myCSA; this idea was first proposed by St. Louis Treasurer Tishaura Jones and Ida Rademacher of the Aspen Institute in February 2016. Modeled after the myRA program, which facilitates small-dollar retirement savings by workers without an employee-sponsored retirement plan, myCSA would address a critical gap in the financial services market. By providing a ready-to-use account platform for new CSA programs, myCSA would unleash a new round of CSA innovation and expansion at the state and local level.
One key adjustment would need to be made to the myCSA structure to make it suitable for saving for postsecondary education rather than retirement. In particular, a Roth IRA, which is used in myRA, would not suit a CSA program. Roth IRAs are primarily meant to save for retirement, and deposits into Roth IRAs must come from earned income. Instead of a Roth IRA, for myCSA, Treasury could consider using a savings account or an investment account more akin to a 529 college savings plan.
In addition, myCSA would also need to accommodate the typical components of CSA programs and the needs of low-income savers via the following features:
- Accessible to multiple depositors, meaning that parents, relatives, children and the CSA program could all deposit funds into the account.
- User-friendly deposit options that facilitate small-dollar saving by low-income families.
- No fees that eat away at families’ savings and no minimum deposit or minimum balance requirements that prevent small-dollar deposits and erode the principal in the account.
- A safe investment product that allows for some growth while minimizing risk.
- Lifelong savings potential, which allows myCSA accounts to be rolled over into a myRA account when participants reach a certain age.
CSAs have the potential to improve the life trajectories of millions of children from low-income households. By making it easier for states and cities to start CSA programs and open accounts, creating a myCSA platform could potentially result in hundreds of thousands of more children having an account. Implementing myCSA is a concrete action the new administration can take within the first 100 days to demonstrate its commitment to promoting opportunity for all children.
Well-Designed CSAs Have the Potential to Help Decrease the Racial Wealth Divide
By Diego Quezada on 01/13/2017 @ 10:00 AM
Supporters of Children’s Savings Accounts (CSAs) often point to the fact that CSAs increase economic opportunity. CSAs are designed to ensure that all families, especially those in low- and moderate-income communities, have at least a modest wealth endowment to pay for postsecondary education. In order to achieve this goal, CSA policymakers should simultaneously address persistent, deep-seated racial wealth disparities in the United States through targeted policy design.
In 2013, the median White household had $144,200 in wealth, which is the value of what a family owns minus what it owes. By contrast, the median wealth of Black households was just $11,200. White families in the bottom quintile of the income distribution have slightly more wealth than Black families in the middle quintiles of the income distribution. Because wealth takes into account the intergenerational transfer of money, it is a better measure of economic security than income. That’s why we see these staggering racial inequities – White families have had much more time to pass wealth from one generation to the next.
The best CSA policies are the ones that are both universal and progressive – that is, they have greater initial deposits and incentive matches for families that come from economically disadvantaged backgrounds.
We know that this targeted approach could work. As CFED and the Institute on Assets and Social Policy have found, a universal, progressive CSA program established in 1979 with investments of $7,500 for low-wealth households and sliding-scale declines to $1,250 for high-wealth households would have reduced the racial wealth divide. The median wealth of Black households would be $7,450 greater today if such a policy were implemented, and the median wealth of Latino/a households would have increased by $6,100. The wealth gap between White and Black households would have fallen by 23%, and by 28% between White and Latino/a households.
Moreover, policymakers should also know that a progressive CSA program would not serve as a panacea to close the racial wealth divide. The returns to investments in education remain unequal for people of color, and for Black people in particular. In 2013, Black college graduates aged 22-27 had an unemployment rate nearly twice as high as their equally credentialed peers overall. In addition to promoting college access through CSAs, policymakers should ensure that people of color benefit equally from the same educational achievements. Increasing funding for the cash-strapped Equal Employment Opportunity Commission stands as one way to address this issue.
In order to achieve their goals of increasing college access and reducing wealth gaps, CSA policymakers should take into account that people have different opportunities and face different barriers toward getting ahead. They should also keep in mind that these disparities do not disappear as education or income levels rise. If CSA policymakers get it right, though, they have a great opportunity to benefit everyone and close wealth gaps.
1:1 Fund Partners Raise Nearly $127,000 for CSAs on #GivingTuesday
By Diego Quezada on 12/23/2016 @ 09:00 AM
Celebrated on the Tuesday following Thanksgiving, #GivingTuesday marks the start of the charitable giving season, when people in the United States and abroad focus on their holiday and end-of-year giving. Since its inaugural year in 2012, #GivingTuesday has cemented its status as a global day to support philanthropic causes through donations of both time and money.
Seven 1:1 Fund partners participated in #GivingTuesday this year, raising nearly $70,000 for their Children’s Savings programs. The newest member of the 1:1 Fund, Partners for Youth Opportunity, participated in their first-ever campaign event last month. Combined with the 1:1 Fund’s dollar-for-dollar matches for donations of up to $500, partners collectively raised $126,900 on November 29 – making a significant difference in the ability of low-income children across the country to save for college.
This year’s #GivingTuesday marked the second-highest day of giving for the 1:1 Fund. The top day was last year’s #GivingTuesday, when the 1:1 Fund offered partners a 2:1 match on eligible gifts instead of the typical 1:1 match. The “I Have A Dream” Foundation affilaite in Des Moines, Iowa raised the most money of any 1:1 Fund partner, hauling in more than $21,000 before the match. The El Monte Promise Foundation in California stood as a close second among the 1:1 Fund’s #GivingTuesday participants, raising more than $18,000 on November 29. El Monte did hold the honor of raising their funds from the largest number of individual donors during this particular campaign. One hundred forty-one people chipped in to El Monte’s one-day campaign, which was an average donation size of $128.
Over the course of the year the 1:1 Fund and our partners raised more than $444,000 in 2016. Roughly $141,000 of that total came in as online donations for the various campaigns, including this year’s #GivingTuesday. Looking ahead to 2017, the 1:1 Fund’s will facilitate four more fundraising campaigns, and the first campaign will coincide with America Saves Week, from February 27 to March 3. We look forward to sharing more about those upcoming campaigns in the New Year and sharing ways that you can support the 1:1 Fund’s efforts to grow children’s savings year-round.
Children's Savings Momentum Hits New York
By Diego Quezada on 12/19/2016 @ 08:00 AM
Children’s Savings Account (CSA) programs have cropped up across the country. By the end of this year, nearly 313,000 children will have a CSA – a 39% increase from the end of 2015. In addition to CSA programs currently operated by nonprofits such as Children’s Aid Society, the “I Have A Dream” Foundation and Credit Do, two recent developments have now brought significant momentum to CSAs in New York.
Next fall, as part of a three-year pilot initiative, all 3,500 incoming kindergarten students in one New York City school district will receive a $100 initial deposit in a CSA and additional incentives to save. In addition, New York Governor Andrew Cuomo signed a bill into law that will enable families to split their state tax refund and direct a portion of their refund into New York’s 529 college savings program at tax time.
About the New York City CSA Pilot
In the New York City CSA pilot, for each of the next three years, all 3,500 incoming kindergarten students in one school district (still to be chosen) will automatically receive an initial $100 deposit into a 529 college savings account. Children can receive another $200 in their CSA over four years if their family meets certain benchmarks such as saving money on their own. The program is part of a three-year pilot designed by the city’s Office of Financial Empowerment (OFE) to create a college-going culture for participants. If successful, plans call for expansion to all kindergarten students in the city. This pilot phase is being funded by a contribution from The Gray Foundation, which is headed by Jon Gray, the head of global real estate at a New York City investment firm, and his wife Mindy. The Grays donated $10 million to start the program.
The program will strive to be inclusive of low-income and marginalized populations. The initial $100 contributions will go into an omnibus 529 account, allowing undocumented immigrants who do not have Social Security numbers to participate. The CSA program also has automatic enrollment, ensuring that all families, especially those with limited English proficiency or less financial knowledge, can benefit from the savings.
Moreover, the program will encourage families to set up their own 529 accounts. Currently, 529 accounts are primarily used by the wealthy – nationwide, the median assets of $413,000 for families with the plans are nearly 25 times higher than the $15,400 in median assets for those without the plans – but New York City’s Office of Financial Empowerment plans to use its Financial Empowerment Centers to advertise 529 accounts to all families and help them set up their own accounts.
About the New York State 529 Legislation
The new split refund legislation for 529s in New York State, which was signed by Governor Andrew Cuomo in late November, has the potential to connect more families with an easy option to save for college. Individuals and families will now have the ability to split their state tax refund and specify that a portion of their refund go directly into New York’s 529 college savings program. Only 3% of U.S. families have 529 plans, and two-thirds of Americans say they don’t know what 529 plans are. Advocates of the legislation and local community-based organizations plan to promote this new split refund option at Volunteer Income Tax Assistance (VITA) sites to help low- and moderate-income families take advantage of an easy way to save for their children’s futures.
Taken together, both the New York City CSA pilot and the NY State split refund legislation for 529s represent significant steps toward making it easier for more New Yorkers to save for college. At CFED, we look forward to hearing more about the rollout of both initiatives in the coming months.
Gift Cards Present New Potential for Children's Savings
By Diego Quezada on 12/06/2016 @ 09:00 AM
In addition to banks and credit unions, Children’s Savings Account (CSA) programs across the country work with 529 plan providers to offer accounts for children to save for postsecondary education. 529 plans, education savings plans that allow families to invest in funds for future college costs, have successfully been used by statewide CSA programs such as Maine and Nevada as well as local programs like Promise Indiana, “I Have A Dream” Foundation, and El Monte Promise Foundation. In recent news, 529 gift card access arrived just in time for this holiday season – but it also raises larger questions about overall access to the plans themselves.
Giftofcollege.com, a registry for online gifts to 529 accounts, has now made plastic 529 gift cards available for purchase at Toys “R” Us and Babies “R” Us retail stores. This new partnership with national retail chains may help more families think about opening or contributing to 529 accounts for their children or loved ones as they are making in-store purchases during holidays and other significant milestones.
How the gift cards work:
- Shoppers at Toys “R” Us or Babies “R” Us will be able to purchase 529 cards in fixed amounts of $25 or $50, or in variable amounts of up to $500, with a small fee.
- After parents receive the card, they must create an account on Giftofcollege.com – if they haven’t done so already – and redeem the card to direct the money to their 529 plan.
- If parents have not set up a 529 account for their children, they must start one and establish an account on Giftofcollege.com to receive the money.
We see potential for some CSA programs to use the gift cards to help increase uptake for families’ 529 accounts. For example, gift cards at large chains could help cash-preferred customers make contributions to accounts for their loved ones or be co-branded with a local program’s name. However, it’s important to note that 529 plans are used by less than three percent of all U.S. families, and these families tend to be wealthier than families who do not have 529 accounts.
To help reduce disparities in access for low-income households, 529 administrators may want to consider additional changes to the account beyond gift cards in stores. For example, they could make the following types of changes:
- Streamline the application forms and disclosure agreements for families, especially those with limited English proficiency or less financial knowledge.
- Reduce initial deposit amounts and/or minimum dollar amounts for one-time and recurring deposits.
- Provide additional deposit options for families that include ways to accept in-person or cash deposits.
- Promote multiple ways to open accounts, including working with local community groups and financial counselors/coaches to help facilitate application submission.
The presence of 529 gift cards at toy retail stories may do some good to help raise awareness for parents of all socioeconomic backgrounds. However, creating easier ways for people to open and contribute to 529 plans will ultimately help the programs assist more families who could benefit the most.
Exploring Best Practices for Integrating Technology into CSA Program Design
By Bahar Akman, Guest Contributor on 11/18/2016 @ 09:00 AM
Inversant, a Children’s Savings program based in Boston, Massachusetts, recently released a report and hosted a follow-up webinar to share insights they gained in their efforts to integrate and test various tech-based solutions to support their program goals. Like many other Children’s Savings Account (CSA) programs around the country, Inversant is interested in exploring how technology can offer cost-effective solutions to expanding program reach while increasing participation and engagement from participants. The research revealed that there is still demographic barriers to accessing and using the internet. Low-income families and families that speak primarily Spanish at home suffer from these disparities.
Starting in fall 2015, Inversant introduced monthly e-newsletters paired with e-survey sweepstakes, text messaging and an online portal for parents. These tech-based outreach and community strategies were developed to support three programmatic goals: 1) to encourage families to stay on track with their savings, 2) to effectively promote financial literacy and capability among college savers, and 3) to enhance two-way communication while cultivating a virtual college saver community. The paper and webinar offer an overview of these new tools and share the knowledge gained while launching and implementing them. For now, the evaluation mainly focuses on engagement with the e-newsletters (and whether participants have access to them). This first attempt at gauging our families’ engagement levels revealed some good news, but also raised new questions that need further attention:
- E-newsletters are useful to families who receive them. The monthly open rate averaged 40%, which is well above the open-rate benchmarks used for the non-profit or education sectors.
- The e-newsletters are a good complement to Inversant’s learning circles.
- 30% of families did not provide Inversant with an email, which means that they could not take advantage of the e-newsletters.
- 92% of families earning above $50,000 per year gave an e-mail address, but only 62% of families earning below $30,000 did so.
- A large portion of Inversant families are Latino, and although the e-newsletters were available in Spanish, almost half of the families who speak primarily Spanish at home did not have access to them.
While tech-based outreach offers low-cost solutions to reaching more participants, our analysis shows that there are still important demographic barriers to accessing and using the Internet. Therefore, it is crucial to assess how comfortable participants are with using email addresses and other online services before seeking to cultivate consistent online engagement.
As we gather data, other briefs will follow with evaluation of impact and effectiveness of other tech-based tools. With this ongoing research, Inversant seeks to start a conversation on best practices for integrating a wide range of tech-based communication and outreach strategies to support CSA programmatic goals.
Please contact Bahar Akman Imboden, Inversant’s Director of Research, if you have questions.
The State of the Children’s Savings Field: A Look Behind the Numbers
By Shira Markoff on 11/07/2016 @ 01:00 PM
CFED recently released A Growing Movement: The State of the Children’s Savings Field 2016. Based on a survey of CSA programs, the document highlights trends in the field. For most people, that document covers all that they want to know about the state of the CSA field. However, for my fellow data wonks and CSA aficionados, this blog offers a deeper dive into the survey results.
One of the more revealing aspects of the survey is the variations in CSA program models. To dig into these variations more, we analyzed key program features by program size. For the purpose of this analysis, we categorized programs enrolling 2,000 or more children annually as “large” and programs enrolling less than 2,000 children as “small.” (See more on annual enrollment across programs in the State of the Field document.) Here is what the analysis shows about differences and similarities in key features between these programs:
- Large programs are more likely to use automatic enrollment — 57% of larger programs are opt-out as compared to 26% of smaller programs.
- Large programs usually have narrower target populations — all but one of the large programs enroll children at just one point in time (birth or kindergarten). Just over half of small programs have only one enrollment point, while the other 49% allow kids to enroll at multiple points (e.g., at any grade in elementary school).
- Large programs are more likely to offer initial deposits — 100% of large programs provide an initial deposit compared to 57% of small programs. However, the median initial deposit amount is the same for both ($50).
- Large and small programs offer savings matches and benchmark incentives at virtually the same rates.
- Large programs are more likely to use 529s as their account platform — 71% of large programs use 529s compared with 43% of small programs.
- Large programs are more likely to be at least partially government funded — 57% of large programs receive some type of government funding (local, state or federal) compared with 34% of small programs.
The analysis reveals that large and small programs tend to differ in some significant ways, particularly around enrollment. This is not very surprising given the need to streamline operations when a program enrolls thousands of children per year—even as many as 35,000. Larger programs cannot expend as many resources per child as smaller programs if they hope to keep administrative costs manageable. So, for example, automatically enrolling children based on data collected through birth or school records is more efficient for a large program than reaching out to and following up with more than 2,000 families about enrolling their children in the program.
Higher usage of 529 accounts for large programs is also not surprising, since four out of the seven large CSA programs are statewide programs. It makes sense that these programs would use the state-supported 529 college savings plan, especially given the difficulty of finding one bank or credit union that is accessible in all regions of the state. The omnibus 529 structure also supports automatic enrollment, since the program can invest an initial deposit on behalf of each child into the pooled 529 account by just using information obtained from state birth certificate records.
Overall, the structure of larger programs matches CFED’s guidance on designing CSA programs for scalability. (See a discussion of this at the beginning of Section A in Investing in Dreams.) Features such as automatic enrollment, working within the existing structure of a 529 account and receiving public funding and support, may make it easier to build and sustain large-scale programs, especially statewide programs. Even for programs that are starting with a smaller rollout, if the ultimate goal is to serve thousands of children per year, it is important to build in the features that will make the program manageable and successful at a larger scale.
CSAs and College Scholarships: The Beginning of a Beautiful Friendship
By Carl Rist on 10/27/2016 @ 01:00 PM
As Sara Goldrick-Rab describes in her new book, Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream, the inability to afford college is a significant reason for low rates of college completion for students from low-income families. In fact, less than 10% of students from low-income households complete college by their mid-20s. Given this strong connection between financial resources and college completion, I was excited to attend the annual conference of the National Scholarship Providers Association (NSPA) earlier this month. NSPA’s 370+ member organizations from the United States, Canada and the Bahamas give over 350,000 scholarships amounting to over a billion dollars each year, helping thousands of students – many of them low-income – pay for college and achieve college success.
As someone with both feet planted firmly in the Children’s Savings Account (CSA) world, it was especially rewarding to see and learn at the NSPA conference about a growing interest on the part of scholarship providers in understanding and integrating college savings into their existing work to help students meet the financial demands of going to college. Dr. William Elliott, Director of the Center on Assets, Education and Inclusion (AEDI), and I were at the conference to talk, in particular, about the potential for collaboration between CSA programs and College Promise Campaigns or Promise Programs (which typically extend a “promise” to elementary or secondary students in a particular community of either scholarships or free tuition to cover all or part of postsecondary tuition costs).
We were already aware of a couple of early-stage innovators in the world of higher education access who had previously begun to integrate matched college saving accounts and college scholarship models. This includes the Scholarship Foundation of St. Louis, which provided almost $5 million in no-interest loans and direct grants to students last year and also opened Missouri 529 accounts with a $500 initial deposit and an offer of additional savings matches to two cohorts of 8th graders at a St. Louis middle school. Another innovator is Earn to Learn, a model effort in Arizona that uses institutional aid from three higher education institutions in Arizona and federal Assets for Independence (AFI) funds to match the savings of low-income high school and college students. Over 1,000 Earn to Learn participants have taken advantage of the program’s generous 8:1 match and have saved over $700,000, which in turn has helped these students earn over $5.6 million in matched savings scholarships.
While at the NSPA conference, we learned about two more promising efforts that combine CSAs with scholarships:
- Forman Scholars. The Forman S. Acton Educational Foundation, launched in fall 2014, promotes educational opportunities for youth in Salem City, NJ. The Forman Scholars, who must attend Salem City High School and meet specific academic and financial need requirements, can receive between $10,000 and $40,000 in scholarships over their college careers. In addition, through a new initiative known as the Acorn Fund, the Acton Foundation will invest in college savings accounts for every child in Salem.
- KC Scholars. The Ewing Marion Kauffman Foundation recently announced the new KC Scholars program, which is designed to increase postsecondary educational attainment in the greater Kansas City area. As part of KC Scholars, 250 scholarship awards will be made annually to students in the 11th grade, with a commitment of up to $10,000 per year, renewable for up to five years. In addition, 1,000 9th graders will be chosen annually to participate in a college savings effort that will provide a $25 initial deposit in a 529 College Savings Plan. In each class of savers, fifty students will be selected to receive a 4:1 savings match (up to $5,000) with an additional $2,000 in potential incentives for students who achieve college-readiness milestones.
All of these models demonstrate the unique power and potential of combining CSAs and college scholarship programs. As we concluded in the paper on CSAs and College Promise programs that CFED co-authored with Dr. Elliott, CSA savers need a “promise” or scholarship in addition to the modest savings CSAs provide to help cover the cost of college attendance. At the same time, College Promise and other scholarship programs need CSAs to fully engage the aspirations of all students, not just those that already expect to go to college.
ALC Provides Launchpad for Latest CSA Findings and Developments
By Diego Quezada on 10/19/2016 @ 10:00 AM
The 2016 Assets Learning Conference provided a multitude of opportunities for CSA leaders to connect, share best practices and generate new ideas for moving the field forward. CFED hosted both a CSA pre-conference September 27, which brought together more than 50 experienced CSA practitioners, advocates, funders and policy champions, along with organizing a set of workshop sessions on CSAs at the conference itself.
Benita Melton from the Charles Stewart Mott Foundation kicked off the pre-conference session by noting the number and diversity of programs represented in the room, reflecting the growth and momentum in the field. At the same time, she pointed out that work remains in developing an account platform to help open accounts, improving parental engagement and improving data tracking data of educational outcomes—all of which were discussed throughout the day.
Following a presentation on interim outcome metrics, Frank DeGiovanni, formerly with the Ford Foundation, and William Elliott, with the Center on Assets, Education, and Inclusion, commented that the field has made the evidence-based case that CSAs work by helping families save, and now programs should focus on improvements and understanding what factors help children do better.
The pre-conference session also featured a Shark Tank-inspired session that included three “pitches” from providers of new technology solutions to make provision of CSAs more accessible and efficient. Megan McTiernan of EARN showcased a new online platform that connects directly to savers' individual bank accounts and rewards them based on their saving activity. As part of the demos, Utah Educational Savings Plan and VistaShare’s Outcome Tracker also presented their products, followed by probing questions from the expert panel and audience.
In addition to the robust discussions during the pre-conference, the Assets Learning Conference highlighted CSAs in a variety of ways. At the opening plenary, CFED’s President Andrea Levere challenged the audience to expand CSAs from 29 states to all 50 states. She also urged attendees to join the Campaign for Every Kid’s Future, which works to connect 1.4 million kids to CSAs by 2020. Finally, four workshop sessions at the 2016 ALC focused specifically on children’s savings, providing attendees with tools to design and launch CSA programs, the latest research on CSAs and strategies for how to pitch their programs to different types of funders and elected officials.
One of the highlights of the conference was a session on CSA research. At the session, Trina Shanks of the University of Michigan's School of Social Work reported on recent findings from a quasi-experimental study of CSAs. The so-called Michigan SEED site, which opened CSAs for kids in Head Start more than a decade ago, was part of the multi-year SEED Initiative. Findings from recent interviews with participants emphasized youth voices about CSAs gathered through qualitative data. This series of interviews revealed that financial barriers remain a challenge in the lives of the CSA savers and that communication between the parents and children about the value of CSAs is critical to increasing college aspirations. In addition, research on Kindergarten to College students, presented by William Elliott, found that more disadvantaged students – students in schools with a high percentage of the population on free or reduced lunch – saved at the highest rates, challenging conventional notions about saving.
Overall, the insights and new findings on CSAs shared at the 2016 Assets Learning Conference and pre-conference highlighted the incredible progress across the country over the past several years to expand CSAs and increase the effectiveness of programs.
If you would like to see speaker presentations and handouts from the CSA workshops and concurrent sessions, visit the Assets Learning Conference website.
Nearly $250,000 Raised in September to Help Low-Income Children Save for College
By Diego Quezada and Monica Copeland on 10/06/2016 @ 09:00 AM
On September 17 at Rose Bowl Stadium in Pasadena, California, CFED’s Children’s Savings team joined CFED Board member Jamie Kalamarides at Prudential’s second annual 4.01k Race for Retirement. The Race for Retirement is a large public relations campaign designed to raise awareness about the importance of saving for retirement. CFED’s 1:1 Fund was selected to be the cause marketing partner for the race again in 2016, and Prudential donated $200,000 as a result of the race—$15 on behalf of every runner who registered. Since 2015, Prudential has provided $600,000 to support Children’s Savings Account (CSA) programs through the 1:1 Fund, making a meaningful difference in the ability of low-income children across the country to save for college.
The 1:1 Fund and Prudential understand the impact of regular savings, which lead to big dreams in the long-run for families. As a result of this partnership, Prudential made a $200,000 donation to the 1:1 Fund, which was presented to CFED’s Carl Rist on the main stage at the race.
At the 2016 Race for Retirement, CFED also released a brand new video that outlines the role of the 1:1 Fund in supporting children’s savings programs and features two powerful CSA programs—Boston-based Inversant and San Francisco’s Kindergarten to College.
To cap off a great month of raising incentive funds to for child savers, four CSA programs also participated in the 1:1 Fund’s Back to School campaign, which took place September 12 – 16. Together, these programs raised an additional $40,000 from individual donors across the country, which will be matched by the 1:1 Fund to deepen the impact of these programs. Additionally, two of the four programs—Barry Community Foundation’s Kickstart to Career program and San Francisco’s Kindergarten to College—created short videos to help publicize their Back to School campaigns, which resulted in over 1,000 views on YouTube.
Thanks to the generosity of Prudential and the individual donors who made the Back to School campaign a success, we will help make the college dreams of thousands of low-income children a reality. For more information about the 1:1 Fund and ways to support matched savings for future generations, visit 1to1fund.org.
How Inversant is Making it Possible for Over 1,000 Families to Save for College
By Tracy Aguila, Guest Contributor on 10/04/2016 @ 03:00 PM
This year, Inversant had the opportunity to not only attend but also present at CFED’s Assets Learning Conference. During the CSAs 101: A Road Map to Designing and Launching Your Children’s Savings Program workshop, we shared our Children’s Savings Account model, outcomes and research efforts.
We know that families who financially plan for college and who are familiar with the college preparation process are more likely to send their children to a four-year school and to understand the positive return of a higher education degree. To this end, Inversant’s Children’s Savings Account (CSA) model combines college saving and planning to empower low and moderate income families to become smart and savvy investors of higher education.
Inversant works with nine partnering sites in Boston, Lynn, Salem, and Chelsea, Massachusetts. Along with opening matched savings accounts, Inversant provides a college-focused financial education curriculum delivered through monthly workshop; we call them ‘learning circles’. These learning circles help create a community of engaged parents who support each other. Along with our learning circles we’ve also developed several tech-driven communication and outreach strategies to better engage our CSA participants. For instance, we’ve recently introduced an online portal where families can view their savings progress, status of their incentives, as well as other program updates. We’ve also developed a series of monthly email newsletters, text message reminders and sweepstake surveys to ensure that more of our participants take advantage of as many resources as possible. Equipped with the right information, parents can help mitigate the typical reasons that lead to low-income students drop out, advise their children to choose a school that offers a better value and provides more student counseling and support, and help lower the cost of college by saving and applying to scholarships.
Since 2009, Inversant has worked with over 1,000 families to save for 1,200 K-12 students. They have opened savings accounts and put away more than $900,000 toward their children’s education. Over 350 Inversant students are currently matriculating in college.
Inversant also values research and understands the importance of evidence-based program expansion. As a team, we are committed to producing rigorous evaluations of our program and collaborating with researchers to determine the various impacts of CSAs on parents and their children. Last fall, we produced our first working paper sharing our lessons learned titled “Building a CSA Program That Empowers Families to Invest in Higher Education.” This fall, our second working paper focuses on the evaluation of our engagement strategies through technology. We have also partnered with researchers at the Harvard Graduate School of Education to investigate the effects of the Inversant program on parents’ engagement levels and on children’s educational performance.
In Massachusetts, Inversant has been instrumental in convincing the legislature to create a commission to examine the desirability and feasibility of a statewide CSA program in Massachusetts. After five years, these efforts culminated into the passing of a bill establishing a two-year pilot CSA program in at least five cities in Massachusetts. The program will be managed by the Office of Economic Empowerment in Massachusetts State Treasury.
As the CSA field is gaining great momentum we hope to increase the visibility of its promise through good research and effective advocacy. Attending the Assets Learning Conference provided a space to share what we have learned as well as learn from others who have the same mission of providing every child with the opportunity to higher education.
Four Reasons Why Education Savings Accounts (ESAs) are Not Children’s Saving Accounts (CSAs)
By Carl Rist on 09/23/2016 @ 01:00 PM
As the children’s savings movement continues to grow and attract attention from policymakers in cities and states across the country, a new trend – related in name only – has also begun to gain some traction at the state level. Beginning with legislation adopted in Arizona in 2011 and continuing in four other states (Florida, Mississippi, Nevada and Tennessee), so-called education savings accounts (ESAs) have been enacted by state legislation. In 2016, as many as 18 states saw ESA legislation introduced.(1) More recently, ESAs have been included in the 2016 Republican Party Platform. Though sharing a similar designation, children’s savings accounts (CSAs) are fundamentally different from ESAs in everything from their purpose to their design to how they engage parents and children. Here is what all CSA advocates should know:
- ESAs are not really savings accounts. According to the Education Commission of the States, ESAs are “individual accounts funded by the state that allow parents or guardians to purchase a broader array of educational choices.”(2) In this sense, ESAs are really an extension of school choice and voucher programs in that they allow parents to direct public funds toward a range of education expenses that may include tutoring, online courses and private school tuition. ESA supporters promote the fact that parents are able to roll-over or “save” any funds not spent on primary and secondary education into a college savings account or toward post-secondary education expenses. But saving other people’s funds (in this case public dollars) is hardly “saving” in the traditional sense. ESAs have also been termed “flexible education spending accounts,” which is a more apt way to describe their purpose and use.
- ESAs are not about post-secondary education. Unlike CSAs, whose proceeds are primarily designated for investing in post-secondary education, ESAs (as noted above) are really about using public dollars to pay for primary and secondary education expenses. While ESAs allow a range of eligible uses, research on Arizona’s ESA program (the first to be implemented and the program with largest number of participants) indicates that 83% of all ESA funds in 2014-2015 were used for tuition costs at private secondary schools.(3) Smaller shares were used for tutoring (7.1%) and therapy (5%).
- ESAs provide no incentives for parents to actively contribute to the account. A fundamental feature of all CSAs is that they offer savings incentives that encourage accountholders to save and build wealth in their accounts. ESAs offer none of these features. Rather, ESAs are a mechanism to allow parents to control public funds that are allocated for the education of their child. ESAs are funded either with a deposit (usually 80 to 100 percent of per pupil funding for a particular child) into a restricted-use account or via reimbursement to parents for education expenses at a level equal to the per pupil revenue the student would have received in public school.
- ESAs have few, if any, progressive features. Another important feature of many CSAs is a progressive incentive structure that provides greater incentives for low- and moderate-income savers. In this way, greater benefits are directed toward those with less means. The only feature of ESAs that might be deemed progressive is that, in each of the states that currently has a program (with the exception of Nevada), eligibility is limited to “special needs” students, defined as those who are currently enrolled in public school and are either: a) subject to an Individual Education Plan (IEP), or b) have a form of legally recognized disability. As ESAs proliferate, however, it appears that they may be moving away from this special needs focus. Nevada’s legislation, passed in 2015, provides universal access to ESAs (though the program is currently on hold pending a constitutional challenge in state Supreme Court). In Arizona, since the original legislation was passed, eligibility has expanded to include children with “unique needs,” including children of armed service personnel, wards of the state, those residing on an Indian reservation, those attending failing schools, and siblings of students already participating in the ESA program.
We encourage CSA advocates to carefully monitor legislation in their state capitols and to be prepared to clarify with policymakers, the media and the general public that ESAs are really an extension of school choice and voucher proposals and should not be confused with CSAs.
1. Inez Feltscher, “The 21st Century Education Savings Accounts: Peer Reviews, Branding and Consumer Reports as Parent Tools,” The State Factor: A Publication of the American Legislative Exchange Council, May 2016.
2. Hunter Railey, “Education Savings Accounts: Key provisions and state variations,” Education Trends, Education Commission of the States, August 2016.
3. Alexandra Hudson and Rick Esenberg, “Education Savings Accounts: A Primer for 21st Century Education Policy,” a report from the Wisconsin Institute for Law and Liberty, July 2016.
How Children’s Savings Accounts are Helping Bridge the Racial Wealth Divide
By David Meni, Graduate Intern on 09/13/2016 @ 02:00 PM
We’ve written a lot on the blog this summer about the growing promise of Children’s Savings Accounts (CSAs) and reports from the field on how CSA programs have been growing and succeeding in more places than ever before. Shira Markoff wrote about how CSAs can fit into the larger national conversation about free or debt-free colleges, Delaney Luna took us through a number of CSA pilot programs that are leading the way in New England, and just last week, Megan Kursik from Michigan Communities for Financial Empowerment discussed strategies for proliferating a strong CSA program throughout the state of Michigan.
Now that the summer is winding down (though you wouldn’t know it from the heat here in DC), let’s take a step back and look at why states and localities have been pursuing CSAs so enthusiastically. Spoiler alert: it’s because they work.
Today we’re releasing a new Fact File: Scholarly Research on Children’s Assets and Children’s Savings Accounts. The Fact File serves as a guide to the growing body of evidence that shows the potential of CSAs to expand opportunity for children, particularly those from low- and moderate-income families and families of color.
A great deal of new evidence on the effects of CSAs has been released in the last few years, particularly from the SEED OK experiment in Oklahoma, the first randomized controlled trial (RCT) of a universal progressive CSA in the United States. The strength of this RCT study reinforces a litany of past research on the promise of CSAs and children’s savings in general: that they improve child development, college expectations and outcomes and help build financial capability.
Here’s a summary of the major findings from the literature:
- CSAs improve early child development and academic performance. Starting children off with savings early in life has ripple effects throughout their development. One study showed that the development effects of having a CSA are similar to that of the Head Start Program. Children with savings have also been shown to perform better on standardized math exams.
- Parents and children with early savings have greater college expectations. Having expectations of attending college– and developing those expectations early for both parents and children – is one of the most important factors that put a child on a pathway to enrolling in college. Studies have shown that CSAs and other early childhood savings can be one of the most potent tools for developing college expectations, particularly in families where neither parent went to college themselves.
- Children with college savings are more likely to enroll in and graduate college. Children’s savings can impact more than just expectations of going to college. Even a small amount of savings – less than $500 – increases a low- or moderate-income child’s likelihood of attending college threefold. CSAs may also be able to help families weather the uncertainty about college affordability and prevent them from having to take out expensive loans or dropping out entirely.
- Children’s savings increases a child’s future financial capability and reduces the racial wealth gap. From reinforcing financial literacy education to helping low- and moderate-income individuals become banked from an early age, studies on CSAs have found that these programs have the capacity to bolster a child’s financial capability as they mature.
The fact that the strongest CSA programs are universal and progressive (matched funds are greater for lower-income families) also means that CSAs can act as one of a number of policies we can enact to help reduce the racial wealth gap.
For more information on these and other findings, be sure to check out our latest Fact File.
Special thanks to our partners at the Center for Social Development at Washington University St. Louis and the Center on Assets, Education, and Inclusion at The University of Kansas for their continued work in the field of CSA research and for indispensable input on this publication.
Meeting (Potential Donors) Where They Are: Online
By Delaney Luna, Graduate Intern on 08/29/2016 @ 12:00 PM
For its most recent campaign in June, the 1:1 Fund made the move to a new online fundraising platform called Classy. This crowdfunding tool allows its users to collaboratively raise money in peer-to-peer campaigns, during which organizations and supporters raise money for one cause using their own networks. Through a platform like Classy, individuals and organizations can create unique fundraising pages to call for donations among their own friends and colleagues. This has allowed the 1:1 Fund and its partners to reach beyond their own networks into their supporters’ networks.
While social media becomes more and more integrated into people’s lives and relationships, crowdfunding platforms have proven to be a critical tool for sharing information and gaining support. Crowdfunding through social media is a way to raise money through both the organization’s connections and their supporters’ connections. By taking advantage of the Classy platform, the 1:1 Fund is adapting the way it engages supporters online. If supporters simply want to donate, they can — but if they want to take on a more active role, individuals and groups can build their own pages and fundraise for a cause they are passionate about. By making these campaigns more participatory, we’re also making them more effective, as highly engaged donors are more likely to donate more — and more often — to the causes they care about the most.
Take crowdfunding platform MobileCause as an example. MobileCause found that individual fundraisers contributing to a campaign will raise and average of $568 in donations from an average of eight donors who might not have given in the absence of the platform. This is especially important as we work to engage millennials, a particularly important demographic in these campaigns. Because 90% of young adults (18-29) use social media, and members of this generation are especially likely to participate in nonprofit fundraisers, tapping into these donors by meeting them where they are is essential. MobileCause’s study found that 71% of Millennials have fundraised for a nonprofit. Furthermore, 62% of donors reached through crowdfunding are new, meaning online, peer-focused donor engagement platforms are incredibly important for garnering donations and expanding reach.
As an industry, crowdfunding has experienced immense growth over the last few years. In 2015, crowdfunding in North America grew by 82%, and the total global industry’s worth rose past $34 billion. Rewards and donations, including nonprofit donation campaigns, make up $5.5 billion of this worldwide total. This rapid growth is expected to continue, and nonprofits are sure to benefit from easier transactions and wider reach to generate support for their causes. By participating early on in this growing industry, efforts like the 1:1 Fund can keep up with innovations and constantly improve their campaigns.
When it comes to our quest to make kids’ college dreams a reality, we’ve already seen promising results. The 1:1 Fund experienced its second-most successful campaign after we switched to Classy, and the feedback from our children’s savings partners has been overwhelmingly positive. We will continue to use crowdfunding in our upcoming back-to-school campaign in September, with the goal of getting our supporters more engaged than ever before. Using peer-to-peer fundraising has helped the 1:1 Fund enhance public engagement, widen our networks and adapt social technology innovations to expand the reach of children’s savings. We look forward to sharing with you just how far these moves can help the children’s savings movement grow!
ALC Session Spotlight: Children’s Savings
By Sean Luechtefeld on 08/25/2016 @ 10:00 AM
In just five weeks, 1,400 asset builders will descend on Washington for the 2016 Assets Learning Conference. Over the next week, we’ll be highlighting several of the 80+ sessions from which attendees will have to choose. If you want to get in on the action and participate in these sessions, it’s not too late! Register for the ALC by Friday, September 2 to guarantee your seat at the table and save $100!
If you’re interested in putting higher education within reach for all families, here’s your personalized ALC agenda:
- Opening Plenary: Reclaiming the Opportunity Economy (Wednesday, September 28, 9 am)
CFED President Andrea Levere will lead a vibrant discussion of the State of the Field, illustrated by insights from consumers about their own financial capability journeys. In addition, IRS Commissioner John Koskinen will welcome the many attendees of this year’s ALC who use tax time to build the financial security of taxpayers in their communities.
- CSAs 101: A Road Map to Designing and Launching Your Children's Savings Program (Wednesday, September 28, 2:15 pm)
Join us for an introductory session on Children's Savings Accounts based on CFED's program design guide, Investing in Dreams. We will provide an overview of key considerations when establishing a new CSA program, and representatives from four CSA programs will also be present to share how their programs work, as well as to address participants' questions.
- Research on Children’s Savings: Recent Findings and Implications for Policy and Practice (Thursday, September 29, 10:15 am)
Recent research indicates that Children’s Savings Accounts may have profound effects on both participating children and their families. Speakers in this session will discuss their latest findings, including how CSAs affect children’s and parents' college expectations, the savings behavior of families, children’s development and more. Speakers will also discuss the implications of these findings for CSA policy and program design.
- CSA Fundraising 102: How to Pitch Your CSA Program to Funders (Friday, September 30, 10:15 am)
One of the most critical—and often most challenging—steps in launching a CSA initiative is securing a commitment of resources from those willing and able to fund such an effort. The ability to secure such commitments depends not only on identifying the right set of potential donors, but also on making the case effectively to these donors. Attendees in this session will learn about the potential sources of funding for CSA programs and how they can use research and other tools to build the case for their CSA program to foundations, corporations and individuals.
- Advocating for Change: Advancing CSA Policy at the State and Local Levels (Friday, September 30, 11:45 am)
This session will focus on the opportunities and challenges for further adoption of children’s savings policies by elected and administrative policymakers. Officials and advocates from the state and city levels will discuss the reasons they support children’s savings programs and share ideas for gaining additional support from public officials across the political spectrum.
These are just a small sampling of all this year’s ALC has to offer. Check out the full agenda here.
We hope to see you in Washington, DC, September 28-30! Learn more and register today at assetsconference.org.
Children’s Savings Takes New England By Storm
By Delaney Luna, Graduate Intern on 07/15/2016 @ 06:00 PM
Leading the country in Children’s Savings Account (CSA) development in recent years, New England is home to several innovative pilot programs. Each initiative employs a unique combination of public and private support to provide children with financial and educational opportunities. This push for expansion has been prompted by the potential for CSAs to fuel college expectations, improve economic mobility and foster financial literacy. These programs also aim to increase both high school and college completion rates by providing young students with the means to begin saving for the future.
Here are some of the programs that are leading the way for children’s savings in New England:
Connecticut Higher Education Trust (CHET) Baby Scholars (Statewide)
The CHET Baby Scholars program grants a $100 educational savings investment to children less than a year old, if their families open a Connecticut 529 account. If the families save $150 before the child is four years old, CHET will match this amount 1:1. Funds for this initiative are provided by residuals from the non-operational Connecticut Student Loan Foundation.
Harold Alfond College Challenge (Statewide)
Through the Harold Alfond College Challenge, the Harold Alfond Foundation will invest $500 for every baby born in Maine after 2013. This opportunity is also available for babies whose families have moved to Maine and have opened a NextGen 529 account before their first birthday. As an opt-out program, this educational investment is made automatically on behalf of the children, and additional contributions to the account can be made by parents, family or friends. In addition to the initial seed funding, NextGen offers matching grants to eligible accountholders.
$eedMA (Worcester, MA)
$eedMA, set to begin this fall for the 2016-17 school year, is a universal CSA program operating in the Worcester Public School System. A 529 account will be opened for each kindergarten student, with a $50 initial deposit funded by public-private partnerships. Aiming to boost college expectations and financial literacy, $eedMA plans to eventually expand to include every kindergarten student in Massachusetts.
Boston Saves (Boston, MA)
This fall, Boston Mayor Martin J. Walsh will launch a three-year pilot CSA program at five public schools. Each kindergartner will be given a $50 initial deposit to start their savings. This program’s goals include developing college expectations, providing financial education and improving higher education completion rates. The pilot has been funded by the Eos Foundation, which aims to end cycles of poverty through childhood investments.
Program in development (Coos County and Manchester, NH)
In New Hampshire, a bill proposing CSA pilot programs in Coos County and Manchester is currently awaiting a decision in the state Senate. Through this initiative, a $50 initial deposit would be provided to about 1,300 students. Funding for this program has not yet been determined.
CollegeBoundbaby is a Rhode Island CSA program, an extension of their CollegeBoundfund 529 plan. Streamlined in 2010, CollegeBoundbaby offers a one-time contribution of $100 to every baby born or adopted in Rhode Island on or after January 1, 2015. It employs an innovative opt-in feature, requiring parents to check “yes” on their normal birth certificate paperwork to receive the grant.
Vermont Universal Children’s Higher Education Savings Program (Statewide)
The Vermont state legislature recently passed a proposal to implement universal children’s savings accounts, with a prospective start date in 2017. The Vermont Student Assistance Corporation, along with philanthropic partners, will deposit $250 in an educational savings account for each child born on or after January 1, 2016. Depending on family income, children may be eligible for additional matched funding up to $250. Vermont also plans to develop financial literacy programs to support this initiative.
Overall, the New England states represent a distinctive regional push toward incorporating asset building into higher education policy and drawing support and involvement from community leaders, businesses and philanthropy. With their current momentum, CSA initiatives in New England can set an encouraging example for other part of the country.
You Might Also Like
Free College and CSAs – The Perfect Pair
By Shira Markoff on 07/13/2016 @ 10:00 AM
In the lead up to the Democratic and Republican National Conventions, we’re producing a three-part series on major themes of the 2016 election season and policy reforms that CFED believes should be at the center of the national debate. We kicked off yesterday with a focus on economic inequality and the role unfair tax programs play in holding back opportunity. Today’s post focuses on higher education access and success, and the game-changing potential of children’s savings policy. And tomorrow, Emanuel Nieves will focus on the growing racial wealth divide and strategies for expanding racial equity as we boost economic opportunity.
As the political parties gather in Philadelphia and Cleveland this month for their conventions, one of the topics that is sure to come up is higher education. The high cost of college, rising levels of student debt and the inequality in degree attainment by income and race have led policymakers and voters alike to conclude that our country is facing a higher education crisis. Some of the ideas we’ve heard for tackling this crisis are free (or debt-free) college, changes to financial aid and student loan refinancing or forgiveness. These ideas mainly focus on the issue of college affordability and ensuring that students are not saddled with unsustainable debt for the next decade — or more — of their lives.
Affordability is certainly a pressing challenge we must address, but at CFED, we have been looking at this problem from a different angle. As part of our mission to build an opportunity economy for all, we have focused on how to foster college access and completion among those least likely to earn a postsecondary degree: young people of color and those from low-income families. Many young adults may never reach the point of looking at or applying for college, because long before their senior year of high school, they have reached the conclusion — due to limited financial means — that postsecondary education is not attainable for them. Making college more affordable would help these individuals if they choose to apply, but the question is how to encourage them to see themselves as future college students in the first place? That’s where Children’s Savings Accounts (CSAs) come into play.
CSAs are long-term savings or investment accounts that help children (ages 0-18) — especially low-income children — build savings for postsecondary education. To help accounts grow, children receive incentives from third parties (e.g. city or state government or nonprofits), such as initial deposits to start accounts and matches for deposits. Family, friends and the children themselves also make contributions into these restricted accounts, which are earmarked for postsecondary education. CSAs help low-income children build tangible savings that can be used for postsecondary education, but more importantly, they help to build a “college-bound identity” in the early years.
Research indicates that low- and moderate-income children with college savings of just $500 are three times more likely to enroll in college and four times more likely to graduate. In addition, growing evidence indicates that savings may improve academic performance in elementary and secondary school, which in turn can help children be better prepared for postsecondary education. Many states and cities across the country, including Nevada, Maine, San Francisco and St. Louis, have already implemented CSA programs that start as early as kindergarten or even at birth.
While CSAs are an important tool for helping low-income young adults get to and through college, they are not a standalone solution. Rather, they complement other ideas for addressing the higher education crisis that policymakers have proposed, especially those that tackle the affordability side of the equation. For example, CSAs can work hand-in-glove with free college proposals. Young children would open a CSA, which would help build their postsecondary expectations and identity as future college students. Then, as they approach college age, knowing that they have support to pay for college will enable those expectations to become reality. Moreover, the flexibility of money in a CSA will provide students with funds to pay expenses not covered by free tuition, such as room and board, books and transportation.
So let’s keep the national conversation going about how we make college affordable, but let’s make sure that the next president and the next Congress make CSAs a part of the plan, too. To build a true opportunity economy, we need to ensure that all children know from a young age that postsecondary education is achievable and that the financial supports exist to make it happen.
Be sure to check back tomorrow for the final post in our series about on how to close the racial wealth divide.
You Might Also Like
Currently reading page 1 of 8.