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Reintroducing….the Save for Success Act!

By Joanna Ain and Chad Bolt on 05/05/2017 @ 03:00 PM

Tags: Federal Policy, Education

Yesterday, Representative Ben Ray Luján (D-NM) reintroduced the Save for Success Act (H.R. 2378) to help turn the tax code right-side up and support low- and moderate-income families as they save for college. The bill reforms the American Opportunity Tax Credit (AOTC) to give families a boost at tax time as soon as they start putting money aside for higher education. By allowing them to claim up to $250 of the AOTC each year they save in a 529, families see tax benefits as soon as they save – not after they’ve gone to college and paid tuition.

We all know the benefits of saving for college and have shouted them from the rooftops. Research shows that starting to save early for college results in stronger college expectations, higher graduation rates, improved social-emotional development and greater likelihood to own savings accounts as adults.

But 529s don’t work for everyone. The Government Accountability Office found in 2012 that families with 529 plans or Coverdells (similar to 529s but also applicable to primary and secondary schools) had median incomes of about $142,000 per year compared to $45,100 for families without. That’s in part because the tax advantage comes when money is withdrawn from the account – not up front when a deposit is made. The Save for Success Act fixes this, creating a stronger incentive for families to start saving early.

As is, the AOTC allows low- and moderate-income families with college expenses to receive a $2,500 tax credit for each of a student’s first four years of higher education. The problem is that this support only comes months after families pay for college, so low- and moderate-income households who don’t have the ability to outlay this expense still struggle to keep up with college expenses. The Save for Success Act will encourage these families to start saving early for college by making them eligible for up to $250 of the AOTC for every year that they save in a 529, starting with the birth of their child. Instead of having to wait to until the college years to get the tax benefits of paying for college, they would be incentivized to start saving from the birth of their child.

The lifetime cap of $10,000 for the AOTC remains. So if the family saved $250 for every year until their child turned 18, they would still be eligible for $5,500 in support during the college years to pay for tuition, fees, books and other college expenses. The bill doesn’t raise the value of the credit — it would just deploy existing federal spending on higher education more effectively.

Endorsed by the National Education Association, the American Federation of Teachers, 529 Dash, Center for Global Policy Solutions, Center on Assets, Education, and Inclusion at the University of Kansas, Center for Social Development at Washington University in St. Louis, First Focus and “I Have a Dream” Foundation, other features of the bill include improved outreach around the AOTC to bolster awareness so that more families know about and can take advantage of the program and a volunteer pilot program to test “real-time” payments of the AOTC so that students can receive financial relief when their education expenses are due throughout the year instead of waiting until tax season.

By restructuring the AOTC, the Save for Success Act has the potential to increase the number of low- and moderate-income families saving for their children’s future. Ask your member of Congress to cosponsor the Save for Success Act (H.R. 2378) today, and if you want to learn more about legislation like this, sign up for our Turn It Right-Side Up campaign today!

ALC Provides Launchpad for Latest CSA Findings and Developments

By Diego Quezada on 10/19/2016 @ 10:00 AM

Tags: ALC 2016, Children's Savings Accounts, Education, Financial Capability

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.

How HOPE Is Helping Create Opportunity for Families in Poverty

By Jessica Shappley, Guest Contributor on 10/12/2016 @ 02:00 PM

Tags: ALC 2016, Economic Inclusion, Education

This year, HOPE (Hope Enterprise Corporation and Hope Credit Union) team members had the opportunity to join 1,300+ of our asset-building colleagues at the 2016 Assets Learning Conference. Throughout the conference we learned and conversed with some of the most innovative minds in the field on how to build an opportunity economy in the United States. After three days of meaningful discussions around what it takes to create a more inclusive economy, we left the conference more eager than ever to make a more equitable economy a reality, particularly in the Deep South.

People entrenched in long-term poverty experience a range of complex challenges that limit opportunity for some. The Mid-South (HOPE’s service region) is home to a quarter of the nation’s persistently impoverished counties – counties where the poverty level exceeds 20 percent for at least three decades. Families who live in these high-poverty areas often must overcome the lack of resources that support efforts to improve their quality of life as education, health care, financial inclusion and employment outcomes remain lower in persistent poverty counties.

It is important to not only understand where poverty occurs but also who it impacts. In the Mid South, more than 30 percent of the population lives in persistent poverty. This is the equivalent to the entire population of Mississippi – approximately three million people. Likewise, communities of color are more likely to live in persistent poverty. Thirty-five (35) of the 39 majority-minority counties in the Mid South are also persistent poverty counties. For some in long-term poverty, this can create an exceptionally difficult environment for them to make ends meet, much less move forward through homeownership, entrepreneurship or post-secondary education.

In areas that continue to suffer from decades of long-term poverty, it is crucial to create ladders of opportunity. This undoubtedly includes closing the racial wealth gap, turning the tax code right-side up and creating pathways to homeownership and post-secondary education.

Creating opportunity for families in poverty is no small feat but with thousands in the field sharing the same vision of a more equitable economy, overcoming these challenges has never felt so in reach.

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

Tags: Children's Savings Accounts, Education

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.

Official Statement on the Consumer Financial Protection Bureau’s Youth Financial Capability Report

By Kasey Wiedrich on 09/16/2016 @ 03:00 PM

Tags: Data and Research, Education, News, Financial Capability

The Corporation for Enterprise Development (CFED) has been working with the Consumer Financial Protection Bureau (CFPB) and other partners on defining financial well-being and ways to measure it over the past several years. A big question that emerged from that work on financial well-being and its drivers was how do children develop the skills and characteristics that support financial well-being and how can we help children and youth build those attributes? CFED, with the University of Wisconsin-Madison, the University of Maryland, Baltimore County, and ICF International researched these questions through an extensive literature review, a scan of youth financial capability programs, and interviews and discussions with expert academics and practitioners.

Last week, the CFPB released a report on the result of this research, which describes the building blocks of financial capability and the ages at which they begin to emerge.

The building blocks are:

  • Executive function – a set of cognitive processes used to plan, focus attention, remember information, and juggle multiple tasks successfully that begins to develop in early childhood (ages 3-5).
  • Financial habits and norms – the values, standards, routine practices, and rules of thumb used to routinely navigate day-to-day financial life that children begin to acquire during middle childhood (ages 6-12).
  • Financial knowledge and decision-making skills – familiarity with financial facts and concepts, and the ability to do financial research and make conscious and intentional financial choices that come into focus during adolescence and young adulthood (13-21).

These building blocks develop over the course of childhood and they build upon and reinforce each other over time. With these developmental windows of opportunity in mind, the report also lays out a set of strategies to help youth develop financial capability:

  1. For young children, focus on developing executive function skills.
  2. Help parents and caregivers actively shape their child’s financial socialization.
  3. Provide children and youth with opportunities to learn from experience.
  4. Teach youth financial research skills.

These recommended strategies reflect the fact that children and youth don’t learn skills or knowledge in one way or in one setting. Schools and educators play a critical role, but parents and home environments are often the most influential agents of financial socialization as CFED documented in our research earlier this year. And as they age and grow more independent, children and youth are influenced by their peers and their own experiences in their communities. To support these different players in building youth financial capability, the CFPB has produced a number of different resources:

Working with the CFPB on this research has been a valuable experience for CFED, and we are excited about its potential for organizing all of those who care about building youth financial capability around a common set of strategies. If you want to learn more, join us at the ALC in the session, “Setting Children Up for a Lifetime of Financial Well-Being,” where Sunaena Lehil of the CFPB will talk about the report and the CFPB’s work on youth financial capability.

Mentors & Money: A Law Student’s Story

By Joanna Ain on 08/11/2016 @ 10:00 AM

Tags: Data and Research, Economic Inclusion, Education

Editor’s Note: To continue our blog series sharing the stories of young workers across the country who we’ve interviewed as part of our Financial Security at Work Initiative, we’re highlighting Ron*, a law student living and working in Chicago.

We know that people’s financial health and physical health are inextricably linked. We also know that people’s chances of boosting both their physical and financial health are higher when they have a personal support network. Ron’s story illustrates both of these points perfectly.

Ron works at a national soda manufacturer in Chicago and is about to start his final year of school. During the school year, Ron works 6-7 hours a day, but since he’s off school for the summer, he’s currently working 12-14 hours per day during the week and every other Saturday. At the soda manufacturer, Ron does the shipping and receiving—loading trucks and doing inventory on all the soda products there. Ron started earning $13 per hour and appreciates both his wage and his job. “I actually like the teamwork aspect of it,” Ron explains. “Everybody likes to work hard there. You stay busy.” Every day is different and interesting, and Ron has learned a lot in the past two months since he started there. Moreover, Ron supports himself and tries to help out his grandmother from time to time.

With such a hectic life, Ron has experienced several financial crises in years past. Each financial wake-up call led to physical health issues. But, in these difficult times, Ron was able to lean on a strong network for support and advice.

Ron had a stroke freshman year of college—a stroke he attributes to working too hard—which put him in the hospital for three weeks and required that he spend the next several weeks after that in rehab. Without health insurance, he acquired a lot of medical debt. Not one to shy away from advice, Ron learned how to budget. A professor at his college showed Ron how to use a calculator, notebook and estimates of how much he would spend each month to figure out a plan. “I was actually slipping a lot in class—falling asleep and stuff. I was worrying about money problems. [My professor] passed on advice. He showed me, and I just took it from there.”

Last year, Ron had another financial wakeup call in the midst of his studies as a law student. He hadn’t been taking good care of himself again due to money issues—he wasn’t eating nutritional meals because he was running out of money at the end of the month and resorting to canned and processed foods instead. He had also fallen behind on his rent. “I slacked off one month,” Ron says, “so it kept going. It was like a domino effect.” His mother set him straight. She said, “If you don’t eat right, you won’t be able to focus.” Ron knew he had to change his financial behaviors in order to get through his final years of law school.

These days, Ron focuses on budgeting and saving in hopes of moving out of his small apartment and buying a car to make transit easier. To make sure he meets his goals, Ron has started diverting some of his paycheck automatically into a savings account each month. To facilitate this process, he uses the bank at work and direct deposit benefits that his employer offers. “It’s actually pretty accessible,” Ron reports. “Your money is there at the same time each pay period. It’s never late.”

He also continues to get guidance from family members. His mother checks in on him from time to time. Ron says, “With school and work and everything, it is pretty stressful. I can talk to her about anything, and so I just let her know what’s going on with me. She gives her advice.” Ron’s uncle, an accountant, works with him on figuring out payment plans with creditors, avoiding bankruptcy and handling his medical debt. Ron shares his appreciation for the help, “I would say I was a little bit lost last year. Now I have gained a lot of knowledge from different people.”

*Name has been changed.

CFED’s Financial Security at Work Initiative, sponsored by the Prudential Foundation, explores the current state of workplace-based financial wellness programs and envision how the workplace can be strengthen as a platform for financial security in the future. At CFED, we envision a world where people like Ron have the chance to transform their hard work into a strong financial future. To learn more about the project, check out:

Free College and CSAs – The Perfect Pair

By Shira Markoff on 07/13/2016 @ 10:00 AM

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

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.

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“I Don’t Want to Be Working Until 2 AM for the Rest of My Life”

By Joanna Ain on 07/06/2016 @ 03:00 PM

Tags: Data and Research, Economic Inclusion, Education

This summer we’re sharing stories of young workers across the country who we spoke to as part of our Financial Security at Work Initiative. We’ll preview of our findings from the study at the Assets Learning Conference in September. In the meantime, we want to give you a peek behind the scenes and meet a few of the people we talked to. Today, we’re highlighting Julia,* a working student out of Portland, Oregon.

Julia has worked as a cocktail waitress at a small bar for the past three months making $15 an hour, not including tips. “This is the first job where my employer has offered more than minimum wage, which is really nice,” she says. While pleased with her pay, as a part-time, hourly worker, Julia does not receive sick leave, health insurance, tuition assistance or other benefits through her employer. She usually works 10- to 11-hour night shifts on three days a week. Sometimes she doesn’t get home until 4 am, which can be very difficult with her school schedule. Julia makes an extra $50 or so a month through cleaning homes, babysitting, dog walking and pet sitting.

In addition to work, Julia attends a local university. She uses the money from her waitressing job to cover her living expenses and takes out loans for her tuition. “I am just watching my debt accrue, and it’s really scary because I have no idea how I’m going to pay it off.” Anxious about her student debt, Julia steers away from getting loans for anything other than her education. “I bought a beater car outright for $800,” she says. Working a late night schedule alongside going to college has increased the time it’s taking to get her bachelor’s degree, but Julia feels it’s worth the extra time. This way, she doesn’t have to take out additional loans to support her living expenses.

Julia shares a two-bedroom townhouse with her boyfriend and their cat. “We got really lucky on rent so we’re probably never leaving,” she explains. The couple splits the rent and their utility costs. Their landlord hasn’t substantially increased their rent, but the couple often sees friends moving out of Portland due to high rents. Julia keeps an eye on Craigslist and rental listings to be prepared—just in case their rent goes up and they suddenly have to move. “[It’s] always on my mind…how can I keep things from getting any more expensive than they are? Because if they do, I’m going to start to go beyond my threshold of being able to take care of it.”

By putting aside $20 of her tips at a time, Julia has built up $1,000 in savings. Sometimes she uses this fund to pay rent and bills when her paychecks haven’t come in yet, but she is diligent about always replenishing the account. This fund is her only safety net. “It’s scary,” she says. “I have no financial backing from my parents, who are great people but are very poor.”

When it comes to getting financial advice, Julia uses Google as her first stop when she has a question. She calls her finances, “a black hole in my knowledge.” When discussing what other resources she has available to her, Julia says that there are not many. She really wants to start saving for retirement, and Julia hopes that in her next job she will be able to access a 401(k) plan where her contributions will be matched by an employer. Julia is excited about the prospect of automatic withdrawal. “They will just come right out of your check, and you’re kind of blind to it,” she says. ”You don’t think about it. You don’t touch it.”

Moving forward, Julia plans on finding resources to help her figure out how to pay back student loans and minimize those payments when she is done with school. Right now, Julia doesn’t know where she can access financial advice: “I don’t know of any place to go. There maybe is some kind of resource at my school, but I’m not aware of it.” She studies public health and wants to teach or work for the county. “I still haven’t decided what, but I don’t want to be working until 2 am for the rest of my life,” she says.

*Name has been changed.

CFED’s Financial Security at Work Initiative, sponsored by the Prudential Foundation, explores the current state of workplace-based financial wellness programs and envision how the workplace can be strengthen as a platform for financial security in the future. To learn more about the project, check out:

Engaging Parents in Their Children’s Financial Development

By Pamela Chan on 05/25/2016 @ 12:00 PM

Tags: Data and Research, Education

Parents are key influencers of their children’s financial capability development. They are critically important in shaping attitudes, values and norms about money during the elementary school years. They are doing this whether or not they know it, as lessons are being imparted explicitly and implicitly.

Parents can start engaging with their kids about money, even if they don’t feel like experts themselves. In a recent report focusing on low-income families and their elementary school-age children, CFED found that there are three key areas where parents are imparting personal finance lessons: spending (which includes planning for as well as the act of shopping), saving and earning. These lessons tended to evolve naturally through everyday activities like shopping or everyday conversations, and tended to communicate broad concepts reflecting an attitude, value or norm about money — for example, spending money requires tough choices, delaying gratification to save and the importance of a strong work ethic.

Repeatedly talking through everyday financial decisions is a powerful way to get kids started on building financial capability. To help parents do this, the Consumer Financial Protection Bureau (CFPB) recently released an online resource called Money as You Grow. This site was originally launched through the President’s Advisory Committee on Financial Capability and grew in popularity to reach 1 million hits in 2015. In its new home at the CFPB, the site features activities for kids at different ages, conversation starters for parents to talk with their kids about money and information for parents about how their children develop financial capabilities in early childhood, middle childhood and early adulthood.

To learn more about this topic, you can:

New Federal Actions Could Improve the Student Loan Borrowing Experience

By Joanna Ain on 05/04/2016 @ 05:00 PM

Tags: Education, Federal Policy, Economic Inclusion

Right now, many soon-to-be high school graduates are finalizing college picks and deciding on financial aid packages, making their first major financial decisions. As they make these critical decisions, it is vital that they have confidence in how their student loan decisions both now and later are being reported and how loan repayment options will be communicated to them in the future.

Last week the Department of Education, Department of Treasury and the Consumer Financial Protection Bureau (CFPB) announced joint efforts to create a safer environment for current and future student borrowers. Building on the Administration’s efforts to create a more equitable landscape for student loan borrowers, these actions will affect how student loans look on credit reports, protect student loan borrowers from unfair practices, personalize the communication going to borrowers and create an easy-to-use platform so students can identify the best ways to repay.

One initiative issued last week updates the student loan side of credit reports. It issues guidance to the credit reporting industry to identify how the Administration’s recent changes affect credit scores, standardize how student loan credit history is reported and account for the complexities of students loans — such as differences in repayment options — as well as the difference between forbearance due to financial distress and other reasons which should not be penalized on a credit report.

A second initiative builds on the Student Aid Bill of Rights signed by President Obama last March, focusing on laying out the rights of student loan borrowers who are a part of the federal Direct Loan Program, created in 2010. This initiative protects those borrowers by forming communication standards for student loan servicers, describes the level of service expected from the servicers and defines expectations for oversight by the Department of Education — including collecting metrics on borrowers and their loans to make positive changes moving forward.

These are important steps toward improving how the credit reporting industry reports student loans and establishing standards for the Direct Loan Program. But there are further steps that the federal government can take. For example, we need to do more to encourage student loan borrowers to build financial capability and grow their assets — both during and after college. CFED has highlighted work in the higher education space that helps support students, such as Earn to Learn out of the Arizona university system. The Department of Education, the Department of Treasury and the CFPB can work to promote these programs and help grow them to a larger scale.

Of course, student borrowers continue to need support post-college. Closing loopholes, such as those that take advantage of veterans, and supporting bipartisan efforts to help low-income folks build assets, like the Refund to Rainy Day Savings Act, can help improve borrower outcomes and reducing loan defaults.

In the meantime, what steps can you take to help improve the student loan process?
Alongside outlining standards for credit reporting and repayment plans, the CFPB is looking for feedback on a new way to communicate different repayment options to student loan borrowers. The goal of this Student Loan Payback Playbook is to reveal repayment options in easy-to-understand, personalized language that servicers will deliver to their borrowers through bills or emails. You can comment on the Payback Playbook here. Also, take a look at the recently launched site This site was created to help borrowers more easily find their best repayment option quickly, in five steps or less. Share it with friends, neighbors, family, those soon-to-be recent high school graduates — anyone you think might benefit from ideas for repayment options. Be part of the process and help the Administration serve the more than 40 million student loan borrowers in America with fairness, consistency and compassion.

The Problem with “Financial Literacy”

By Dominique Derbigny on 04/26/2016 @ 02:00 PM

Tags: Financial Capability, Integrating Financial Capability, Behavioral Economics, Education

Although the economy is slowly recovering from the Great Recession, many households lost wealth in the crash, and the financial forecast remains bleak for other low- to moderate-income families. In fact, almost half (44%) of all Americans are liquid asset poor, meaning they lack a sufficient cash cushion to absorb financial shocks. So in the aftermath of the financial crisis, demands escalated for financial education for the general public, with increased support from social service programs, educators and policymakers. Currently, 21 states require high school students to learn personal finance or be tested on personal finance. Financial interventions are certainly warranted during this turbulent time — but how much of an impact can financial education alone have?

We often hear programs use the terms “financial literacy” and “financial capability” interchangeably, but these complementary terms have distinct meanings. Literacy refers to knowledge or competency in a certain area, thus financial literacy refers to knowledge of financial concepts. But the corollary to financial literacy is “illiteracy,” and the term is problematic not only because of the negative connotation, but because it suggests that people with money troubles struggle because they don’t know any better. The reality is more complex than that. Likewise, focusing solely on financial education also implies that it's the need to know how to manage one’s money that is most important; however, many people know how to manage money but don't have access to the financial products and services they need to do so most effectively.

That’s why we at CFED focus on financial capability, instead. Financial capability is “the capacity, based on knowledge, skills and access, to manage financial resources effectively,” which means being able to put that knowledge into practice to make sound financial decisions. And evidence that financial capability works continues to pile up.

Evidence reveals that we learn more from education if it is experiential and relevant to our lives. Just as financial literacy is just one component of financial capability, financial education is merely one type of financial capability service. Other services, such as financial coaching and credit building, are seeing promising results when tied with housing and workforce development programs. Studies show that pairing financial education with other services, such as access to checking or savings accounts, may yield greater results in terms of behavior change. Meanwhile, results of evaluations of financial education programs are mixed at best, and often don’t indicate strong, lasting knowledge gains. If we focus merely on financial literacy, we miss the opportunity to spur behavior change by connecting knowledge with action.

For several years now, CFED has been pushing organizations to expand beyond financial literacy and education. The Financial Capability Lifecycle offers ideas for where and when to connect individuals with appropriate financial capability services. For example, we are currently partnering with the Consumer Financial Protection Bureau (CFPB) on the Youth Employment Success initiative to help youth employment programs integrate financial capability services. Youth participating in these programs (ages 16-24) are starting to develop financial habits, earn money and plan for their lives beyond high school. This project aims to support youth employment programs in pairing financial education with access to youth-friendly financial products, FAFSA support and savings opportunities to help youth start off on the right financial footing.

What are ways that your programs can move beyond financial education to support individuals and families across the lifecycle in meeting their financial needs and goals? Tweet your ideas using #FinCapWorks!

"I'm Glad We're Starting Early"

By Kaitlin Archambault, Guest Contributor on 04/14/2016 @ 11:00 AM

Tags: Children's Savings Accounts, Education

Editor’s Note: April is National Financial Capability Month, and the “I Have A Dream” Foundation (IHDF) is teaming up with the 1:1 Fund to profile three of IHDF’s Children’s Savings Account (CSA) programs. Today’s blog post is the second in a series about how each of these programs uses the college savings account program to support their students' college goals. You can read the first installment here.

This week, we spoke with Billy Kirby, the Dreamer Academy Program Manager at the Des Moines Dreamer Academy at Findley Elementary.

The Des Moines “I Have A Dream” Foundation is in the second year of its CSA program, which serves 274 students in grades K-5. Des Moines Dreamers can earn up to $200 for their accounts each year and have earned $20,000 as a group for their CSAs so far. Dreamers, who are all eligible for free or reduced school lunch, can earn deposits into their accounts for meeting milestones like monthly book logs and attendance. The book logs in particular have made a big impact; in the week leading up to their due date, the whole school hears about the connection between reading and college savings.

While kindergarten may sound like an early age to broach the topic of college savings, simply having a savings account in a student’s name increases their likelihood of attending college six fold, and just $23 per month can grow into $16,000 in savings by age 18. Plus, talking about college savings helps to reinforce a college mindset and seed future financial literacy. CSAs are not just about money, but also aspirations and getting students from low-income and first generation backgrounds to see themselves as college graduates.

Since the Des Moines program serves elementary-age Dreamers, the program also puts a lot of focus on educating parents about the benefits of saving for college. This focus is apparent through savings milestones; for example, parents can earn funds for their children’s CSAs by attending parent teacher conferences. Program staff also make a point to talk about CSAs every time parents visit the school and are always available to enroll or activate new accounts.

While some parents have jumped on the opportunity to open CSAs right away, the Des Moines Dreamer Academy team have noticed that often, parents find CSAs too good to be true. Some parents don’t realize that “I Have A Dream” is funding these savings milestones, not the parents. To help promote understanding around CSAs and financial literacy, the Des Moines program has held a number of informational events.

On Tuesday, April 5, the Des Moines Dreamer Academy welcomed parents and families to a financial literacy workshop, called A Beginner’s Guide to Paying for College. Hosted in partnership with Iowa Student Loan Liquidity, another nonprofit that helps individuals fund post-secondary educational opportunities, the event gave parents two sessions to learn more about saving and paying for college. One sessions focused on outside resources to pay for college, the FAFSA process, grants, scholarships and the benefits and limitations of federal and private loans. The other session included resources for following a monthly household budget to free up extra dollars for college savings.

Parents also received tips to encourage student achievement and build on post-secondary planning and expectations at home and school. Karen Bedwell, who has two children in the Dreamer Academy and another entering next year, found the budgeting info useful. “This was very helpful, and I’m glad we’re starting early,” she said.

Sara Herrin, another parent and teacher at the Dreamer Academy, had rave reviews saying, “This is an amazing event. It has been a while since I’ve filed the FAFSA and I learned a lot!”

Kaitlin Archambault is the Marketing & Communications Manager at the “I Have A Dream” Foundation.

Borrowers with Disabilities Could Have $7.75 Billion in Student Loans Forgiven

By Joanna Ain on 04/13/2016 @ 02:00 PM

Tags: Federal Policy, Education, Economic Inclusion

Many individuals with disabilities are used to fighting barriers and not being given options. But fortunately, many Americans will disabilities will soon be getting an option that could make their lives easier, rather than more complex.

Yesterday, the Department of Education announced that in the upcoming months, they will notify 387,000 individuals with disabilities of a life-changing option: federal student loan forgiveness through the totally and permanently disabled (TPD) discharge program.

Since 2013, borrowers with disabilities have had the chance to have their federal student loans discharged if they had the special designation of “Medical Improvement Not Expected” (MINE). However, many applicable individuals did not know that this rule existed. With the Student Aid Bill of Rights, President Obama proclaimed that the Social Security Administration and the Department of Education needed to work together to make sure that people who are disabled do not have their disability payments taken to pay defaulted federal student loans but, instead, have their federal student loans forgiven.

To more effectively educate this population, the Department of Education matched the data between federal student loan borrowers and those receiving Social Security Disability payments with the MINE designation. The 387,000 borrowers have a total balance of $7.75 billion in federal student loans. Of those borrowers, 179,000 are in default of their loans, and over half of these individuals are at risk of losing their federal tax refunds and having Social Security payments garnished through the Treasury Offset Program (TOP).

Individuals who qualify for the TPD discharge will receive two notifications by mail, which will include guidance on how to apply for federal student loan forgiveness and information on the potential tax implications. By completing this streamlined application process, their federal student loans will be discharged. That’s right: because these individuals have already been identified and approved, they will not have to send in any further documentation.

However, individuals need to carefully consider their financial situation before accepting the loan forgiveness. That’s because, depending on the situation of the borrower, the discharge may have large tax consequences, since the loans forgiven may count as taxable income. Whether the loan forgiveness is worth the tax implications can be a complex question for many households to answer — is it worth taking the TPD discharge or will the taxes be too big a burden? President Obama has recommended that loan forgiveness through the TPD discharge be excluded from taxable income in his 2017 budget proposal. If President Obama’s recommendation is approved by Congress, this complex question would be removed from the equation and the process of federal student loan forgiveness for individuals with disabilities would be even further simplified.

We know that options for low-income people with disabilities are few and far between. This move by the Department of Education proactively notifies one of our most vulnerable populations that their federal student loans can be discharged with a simple application process. This is an option worth celebrating. Please spread the word to those who may be eligible to keep an eye on their incoming mail!

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4 Keys to Making an Affordable College Decision

By Bahar Akman, Guest Contributor on 04/12/2016 @ 12:00 PM

Tags: Children's Savings Accounts, Education, Financial Capability

Editor’s note: April is National Financial Capability Month, and we are running a month-long campaign to raise awareness about the moments in one’s lifecycle when financial capability matters. Today, Inversant shares four financial capability lessons for families of students preparing to start their post-secondary education. Inversant is a partner of the 1:1 Fund and the Campaign for Every Kid’s Future.

Higher education is an expensive investment, especially for low- and moderate-income families. According to Sallie Mae’s How America Pays for College 2015 Report, “[s]tudents in low-income families paid a higher share of their college costs (32%) than students in middle income (29%) or high-income (19%) families.” The report also suggests that families who make financial plans early are more likely to send their children to four-year schools and possess a positive attitude toward the value of education. With this in mind, Inversant’s Children’s Savings Account (CSA) model combines college saving and planning to empower low- and moderate-income families to become smart investors in higher education. While families are saving for college, they are also equipped with information, knowledge, resources and tools to plan with their children.

At Inversant, we celebrate April, not only because it is National Financial Capability Month, but also because it’s a critical time when many high school seniors and their families decide which college they will attend. Here are four ways that financial capability can help families make wiser higher education decisions:

1. Understanding the real price of college by decoding financial award letters.

Financial aid letters can be hard to understand. Families have to compare different financial aid packages and determine which college offers the best deal. While some schools seem to offer more financial aid, it may be more in form of student loans, which need to be repaid. As one parent explained:

“My daughter has a bag full of all those award letters ... the fewer the loans, the better. She got a good combination of grants and scholarships, but there’s definitely loans in there as well. And [I’m] looking at what is the exact tuition of that school and trying not to get too excited with the amount that’s on there, because I have to look at the schools’ tuition and figure out what exactly does that mean.”

2. Starting a conversation with children about the return on investment.

Loans aren’t the only thing to watch out for, though. Keeping the price in mind, families also have to take into consideration the return on investment for each school according to the major that students select. If a school offers a good deal with minimal loans, but the student is not employable at graduation, it might actually make more financial sense to borrow more money to attend a school that is more promising in its post-graduation metrics. To inform themselves, families also learn to utilize many online tools, such as College Scorecard and net price calculators. Fortunately, many families are already thinking about the return on investment from post-secondary education; in a recent survey, we found that 98% of Inversant parents talked to their child about the relationship between education and career.

3. Getting additional sources to cover expenses.

Being financially capable and savvy also means knowing to harvest all the additional financial sources that can help cover college-related expenses. Nearly nine in 10 Inversant parents know that the FAFSA application is available for submission starting January 1, and 97% agree that the online FAFSA application is processed faster than paper applications. Families also learned about numerous private scholarships available to them and how to look for them. As a student explained: “I knew that you could get scholarships and whatnot, but I didn’t really know how to get them or what you had to actually do or where to sign up or where to look for…different sources.”

4. Saving early.

Inversant also encourages families to save for college. We provide assistance in opening accounts and financial incentives to save. Promoting the habit of regular saving not only helps with paying for college, but also contributes to longer-term financial stability. For families that do not have a bank account, or did not save before, this is an important financial milestone that is likely to spill over to other kinds of saving, such as emergency and retirement. One student explained:

“Inversant has helped me have somewhere to start saving money because before my mom joined the program, we didn’t save any money and we didn’t know where to start. But now we put money every month into the bank ..." Families learned quickly that the earlier they save start saving, the better they will be equipped to weather the expected and unexpected expenses they may encounter.

At Inversant, we believe that financial decisions involving higher education provide a powerful teachable moment when families can learn financial literacy and turn it into financial capability. This empowers parents and children and puts them on a path of lifelong financial stability and well-being.

Bahar Akman is the Director of Research at Inversant.

Financial Stress Isn't Always Bad

By Joanna Ain and Bryan Ashton, Guest Contributor on 03/02/2016 @ 03:00 PM

Tags: Financial Capability, Integrating Financial Capability, Education

Many college students, at the end of their teenage years or just into their early twenties, are on their own for the first time. They are starting to get a sense of what the world looks like with less parental guidance — and more financial freedom. But that freedom can be stressful. For many college students, financial stress adds layers of complication to their existing anxiety about classes, midterms, papers and on-campus living. And of course, too much financial stress can impact students’ academic performance, mental health and social life.

But there can be value in actually increasing an individual’s level of financial stress. A graduating engineering student with $50,000 of debt, who has pinned down future employment with a management consulting firm, may just need some gentle coaching and a calming influence to help deal with any money worries. On the other hand, a second-year student with an undecided major and mounting debt might put off planning for her financial future and start racking up credit card debt. She may figure that she is in debt up to her eyeballs anyway so a few more Uber rides, dinners out and iced caramel lattes won’t make a big difference. Helping her to build an awareness of her financial standing can be a catalyst for behavior change. Otherwise, it might be difficult for her to see the ramifications (both short- and long-term) of the debt that she has accumulated until she leaves school and is out on her own. While too much stress is debilitating, some stress can be productive.

That’s where financial coaching can be valuable. Take the Ohio State University’s (OSU) Scarlet and Gray Financial (SGF). Housed in the OSU Student Life Student Wellness Center, SGF helps students on the cusp of financial independence manage stress through a personalized goal-driven financial process. This process encourages the development of action steps to move students toward financial awareness and behavior change. SGF’s just-in-time component builds interventions into critical points of a student’s life, such as helping them get information as they are deciding whether or not to apply for an emergency loan. Additionally, there is a check point in a student’s second year where SGF can provide a financial checkup for the student.

So how do you moderate financial stress when students are facing a major financial hurdle? When a student comes to SGF having significantly over-borrowed during their first or second year, overwhelming the student with the magnitude of the problem may put them into an unhealthy panic. Slowly easing them into an awareness of their debt and a plan to move forward is key, and ideally, the coach builds a long-term relationship working with the student to do that. This comes from establishing trust with the student and developing a relationship deeper than just finances. Finances are a very difficult topic to discuss, and time is therefore spent initially talking with the student about less anxiety provoking topics to gain their trust.

While there has been significant attention paid to the negative impact of financial stress, less attention has been paid to identifying the appropriate level of financial stress and its role in financial decision making. Colleges can present great case studies to understand financial stress. Not only do they demonstrate how financial stress may negatively impact student success, they can also show how increasing financial stress can help students develop healthy financial attitudes and behaviors. A healthy amount of stress can help students make smarter, more proactive and more realistic financial choices in the present and become more resilient to financial pressures in the future.

Bryan Ashton is an Assistant Director within the Student Life Student Wellness Center, overseeing financial education and outreach, Scarlet & Gray Financial peer to peer financial coaching and additional functional areas in the SLSWC.

To Boost the Number of College Graduates, Don’t Forget the “Somes”

By Russ Olwell, Guest Contributor and Marquan Jackson, Guest Contributor on 02/22/2016 @ 12:00 PM

Tags: Individual Development Accounts, Education, Data and Research

Policymakers have been focused for some time on the importance of more high school students applying for and attending college. A rise in the number of residents with a college degree is seen as the key for community and economic development, as these individuals have a higher earning power and are less likely to suffer unemployment.

However, there is another population, those students who have graduated high school and started college (either two- or four-year) but left before graduation. Right now, this group represents almost 25% of Michigan’s adult population, according to the American Community Survey (2010-2014). These adults are counted as having “some college,” and their experience has often left them saddled with unpaid bills and student loan debt, but often with nothing to show for their experiences — and without the increased earning power of a college degree.

In our work with an Individual Development Account (IDA) program at Eastern Michigan University with the Ypsilanti Housing Commission, we see many adults in our community who fall into this “some college” category, and their status is an economic drag on their family and, therefore, on the local economy. When we surveyed public housing residents last year, the largest category of debt reported was student loan debt, with over half of the population owing money on loans and many having unpaid college bills in addition.

Addressing the needs of “somes” is a key to improving the economic condition of communities and families. Helping people with some college graduate with a certificate, associate’s degree or bachelor’s increases their earnings power, makes them a role model within their own family — and gives people one less discouraging story about higher education not paying off.

Most importantly, when we work with people in our neighborhoods to complete college, we raise the number of college graduates in the area and help to increase the average income of the neighborhood, but we do so without gentrifying it. We do not always need to recruit young people or out-of-state newcomers to boost the number of college graduates in our community if we work intensively with the people that we have who may be only a few credits short of a college degree.

The Family Empowerment Program has worked on similar issues over the last three years with residents at Hamilton Crossing. To address the needs of “somes,” we have advocated with university collections to make sure participants can restart classes, helped students find scholarships and created an IDA program that matches participants’ savings towards higher education by 8:1. These efforts have given us some victories — students finally able to graduate, pay their bills and move on with their lives — but they have also revealed the extent and depth of the problems these students face.

However, with some effort and resources, more could be done to help “somes” become graduates. These are just a few of the policies that could help:

  1. States can invest in programs that help workers save for college expenses to complete degrees. Individual Development Account programs can help multiply the savings of participants, but partners are needed to provide the matches to enable IDA programs to leverage federal funds.
  2. Colleges and universities can be more proactive and flexible in working to get students back into the classroom. Rather than relying solely on collections as a strategy to recoup lost tuition, a more flexible approach would allow some forgiveness of unpaid tuition bills (particularly late fees) if the student can return to class and complete the degree program. Without a degree, many students have no chance of earning enough to pay off unpaid bills and loans. This strategy is in the colleges’ best interest, as alumni are better to have than debtors.
  3. Community groups and social service agencies can reach out to “somes” to help them complete degrees or find ways to receive credit for the work they have done so far. “Reverse transfer” programs can help students get an associate’s degree for work already completed, but too few people know the options that exist for degree completion.

Higher education is not only good for the graduate — it has benefits for their family and the whole community as well. With each successful college graduate, families and neighborhoods get one more person better able to support her or himself, one more person who serves as a role model and guide to others, and one more example of why completing a college degree is important.

This same message needs to be delivered to adults in our community, particularly parents. Many parents returning to college do so to be a role model for their own children. While we are encouraging all our high school students to think seriously about what they want to do after graduation, we should also encourage many of their parents, uncles, aunts and cousins to finish what they started in college and to finally gain the economic and other benefits of a completed certificate or degree program.

Russell Olwell and Marquan Jackson are part of the Ypsilanti Family Empowerment Program in Ypsilanti Michigan. Their IDA program is a partnership of Eastern Michigan University, the Ypsilanti Housing Commission, the United Way of Washtenaw County, Zingerman’s Community of Businesses, Great Lakes Capital Fund and Chesapeake Community Advisors.

ESSA: A New Opportunity to Teach Financial Capability in Schools

By Joanna Ain on 02/16/2016 @ 02:00 PM

Tags: Education, Federal Policy, Financial Capability

Imagine a world where, at the ripe old age of 18, young people would know which number to pay on their credit card bill, how to budget a month’s worth of expenses and what their credit report looks like. They would have all the tools to help them succeed financially — through college and student loans, with their first job and through their first credit card and car loans.

This world may not exist today, but it is within our grasp. Last December, President Obama signed the Every Student Succeeds Act (ESSA) into law. Replacing No Child Left Behind, which had put decisions around testing and accountability in the hands of the federal government, ESSA gives states and localities the flexibility to prioritize the needs of their students and the needs of their communities. This is an opportunity for states to make financial capability a priority. By prioritizing the integration of financial education into the public school system, coupled with practical opportunities to practice with finances, ESSA enables students to start building financial capability at a young age. Helping our children to learn skills and attitudes that lead to long-term, personal financial well-being makes for financially healthier families and communities. States and localities should take advantage of this opportunity and integrate financial capability into their educational plans.

So how can states and districts think about increasing students’ financial capability from a young age? In a chapter from the recently released book, What It’s Worth: Strengthening the Financial Future of Families, Communities and the Nation, Elizabeth Odders-White and Charles Kalish discuss the specific activities to focus on in the early childhood, elementary and high school years. They state that financial socialization starts at the elementary school age where youth “develop values and norms about money.” While much of this socialization comes from family, teachers also have an influence.

From the ages of six to 12, children cultivate their attitude about money and create a strong financial foundation. When schools give young people Children’s Savings Accounts to start saving for higher education, students can learn how savings accounts work and what it feels like to see your savings grow. (Children’s Savings Accounts also have another added benefit of building students’ aspirations to complete postsecondary education.) When schools allow students to run in-school bank or credit union branches with complementary classroom financial education, such as through the Assessing Financial Capability Outcomes (AFCO) Youth Pilot, young people can see firsthand how the financial world works.

Later, older students through their teen years can learn about financial concepts and gain more concrete hands-on skills as they go through middle school, high school and beyond. As an example of the way schools can think about this work, Juma Ventures has a three-pronged approach for high-schoolers to earn, save and learn — all towards the goal of college completion.

There are numerous ways for this integration to be implemented on a state-wide level. Arkansas, for example, requires students to take an economics course before graduation. South Carolina, while not having a high school personal finance class requirement, mandates that their Board of Education incorporate financial literacy into already existing high school coursework. With the help of their local schools, students can grasp financial capability skills and be better prepared to start their own financial journey. After high school graduation, college-bound students in Arizona can take advantage of the Earn to Learn program, which matches their savings at an 8:1 rate to help defer the cost of attending Arizona State University, Northern Arizona University or the University of Arizona.

Young people’s money habits — good and bad — can shape their financial lives for years to come. By saving and purchasing wisely and knowing the differences between needs and wants, young people can start out on a good path. Learning more can help them to avoid predatory lending practices, seek solid investments and using smart financial tools. Perhaps more importantly, young people with strong financial capability know enough, and have enough confidence in that knowledge, to be empowered to ask the hard questions they need to ask bankers, mortgage lenders, landlords and employers.

Using frameworks like the one Odders-White and Kalish highlight, ESSA is an opportunity for states and localities to integrate financial education into school systems. Creating standards in our school systems that help young people become financially empowered is a win-win for students and their communities. The time is now for states and districts to take advantage of ESSA and put financial capability standards in place that reflect the best interests of the students and the communities where they live. Alongside making college affordable for all Americans, starting young people off at a strong and stable point through financial capability programs in their public school education will position them to be financially capable adults throughout their lives.

CSAs: A Fiscally & Socially Responsible Strategy That Works

By Clint Kugler, Guest Contributor on 02/11/2016 @ 04:00 PM

Tags: Assets & Opportunity Initiative, Children's Savings Accounts, Education

This blog was originally posted by the Indiana Assets and Opportunity Network, an A&O Network Lead Organization.

Ask Alexis, a 7 year old first grader in Wabash County, what she wants to become when she grows up and she will tell you an “eye doctor.” Alexis is not the daughter of a doctor, but rather one of five kids in a low income, single-parent household. The tremendous pressures families face today make it difficult to prepare for their children’s futures. Fortunately, communities are harnessing the power of asset building and employing children’s savings accounts (CSAs) as a fiscally and socially responsible strategy. With community support, CSAs can help kids around our state and nation—kids like Alexis—pursue their dreams.

Promise Indiana, currently operating in eight Indiana counties, is a community-driven CSA program that helps youth increase hope and build the assets they need to pursue education beyond high school. Students with a dedicated college savings account in their name are three times more likely to attend college and four times more likely to complete college. Account ownership helps youth build “college saver identity.” These findings and other asset research have significant implications for educational attainment, workforce development, and community well-being.

Currently, 11.7% of youth in Indiana have a 529 college savings account, and that rate varies widely by county. Only eight counties have a savings rate of 15% or higher of youth under 18 with a 529 account. Almost half our counties have a savings rate of 6% or fewer youth with 529 accounts.

CFED recently released its 2016 Assets & Opportunity Scorecard. The Scorecard identifies a barrier which affects the rates at which Hoosier families build assets: asset limits on public assistance programs like SNAP and TANF. “Personal savings and assets are precisely the kinds of resources that allow people to move off public benefit programs. The existence of asset limits can discourage families considering or receiving public benefits from saving for the future.” CFED’s recommended policy change for Indiana would help Alexis’ family and thousands like it to take important steps toward a better future.

Eighteen months ago Alexis’ mother had never heard of a 529 and establishing a college savings account was not on her mind. At registration, her school made it easy to learn about the Wabash County Promise and start a 529 account for her daughter, right next to the table to sign up for the bus. In less than four minutes, Alexis had a College Choice 529 with the initial $25 investment in that account from Parkview Health. Alexis left the registration event that day with a certificate—a physical reminder that she has a college savings account.

Throughout the fall, Alexis and her classmates in Wabash County, all kindergarten through third grade students, explored what they want to be, discovered the education they need to get there, and identified the champions in their lives who will help them along the way. Following an exciting field trip to Manchester University with 1600 other kids from around the county, Alexis was off to share her future plans with her champions. By raising deposits totaling $25 or more from her champions—family, neighbors, teachers and her grandmother’s co-workers—Alexis received an additional $75 as a match from her community. Throughout October, six important adults in her life provided words of encouragement and made deposits into her Promise account totaling $135. Today, just 18 months after her 529 was established, Alexis has over $315 in her college savings account! With support from the Indiana Education Savings Authority (IESA), Parkview Health and Lilly Endowment Inc., even more communities will make it easy for families and champions to support youth like Alexis by making a local “Promise”.

The Promise helps communities leverage support for families to begin saving for higher education and for youth to begin college and career discovery. To learn how your community can become one of the pilots selected for the 2016-2017 school year, visit or view and complete the application at Communities selected to pilot will have a unique opportunity to be one of the first in the state to receive operational support to launch the initiative and create meaningful outcomes for youth and families.

In order to build an opportunity economy in which everyone has the chance to succeed, we need to harness the potential of every child. CSAs provide a low-cost, high-return strategy that communities can use to help kids develop the hope, support and assets needed to pursue their dreams.

Want to do more to empower students reach their dreams of post-secondary education? Join the Campaign for Every Kid's Future and help us expand access to Children's Savings Accounts to 1.4 million kids by 2020!

How We Can Reach President Obama's Goal to "Make College Affordable for Every American"

By Dominique Derbigny on 01/14/2016 @ 10:00 PM

Tags: Education, Federal Policy, Individual Development Accounts, Assets & Opportunity Initiative

During President Obama’s final State of the Union Address on Tuesday, he declared that “we have to make college affordable for every American,” and he went on to say that “providing two years of community college at no cost for every responsible student is one of the best ways to do that.”

These comments echo what we at CFED have been talking about for a long time: to get ahead—or even just to get by—in today’s economy, a college degree is increasingly a requirement. At the same time, skyrocketing college costs have put a damper on many students’ dreams of higher education, as many young people are wary of taking on burdensome debt if they don’t have enough savings to pay for school. As a result, only one in 10 low-income students goes on to finish a college degree by their mid-twenties. So how can we help more young people access the education they need to succeed in a twenty-first century economy?

One year ago, President Obama offered a solution when he rolled out the America’s College Promise Proposal, which seeks to increase access to post-secondary education by funding community college for millions of students. Under this legislation, federal funding would cover 75% of tuition expenses, with participating states supplying the remaining 25%. To qualify, students must attend community college at least half-time, maintain a 2.5 GPA and make steady progress toward completing their program.

The America’s College Promise Proposal has the potential to:

  • Benefit an estimated 9 million students.
  • Save full-time community college students an average of $3,800 in tuition per year.
  • Increase the number of students who complete an associate’s degree.
  • Create a pathway to a four-year college or university.
  • Reduce college debt and the student debt divide.
  • Make community college more accessible to non-traditional students.

Despite these promising benefits, the proposal has some critics. Some opponents are concerned that making community college free may dampen enrollment at four-year colleges and universities—particularly historically black colleges and universities (HBCUs), which are increasingly relying on tuition revenue to cover costs.

Fortunately, the Assets for Independence (AFI) program offers a possible solution to this problem. Through the AFI program, low-income students can save money in an Individual Development Account (IDA), a matched savings account for eligible asset purchases, including post-secondary education. Then, by working with community organizations to pair scholarship dollars with federal funding through AFI, colleges can leverage funds to increase affordability and accessibility.

One organization successfully executing such a strategy is Arizona Earn to Learn, which partners with three state universities in Arizona to offer qualifying low-income students the opportunity to save $500 of earned income with $2,000 of federal matching funds and $2,000 of scholarship funds, for a total of $4,500 toward education expenses each school year.

Coordinating with community organizations to leverage AFI and other funding streams is just one idea for tackling the rising cost of higher education. If we are going to achieve President Obama’s goal of making college affordable for every American, we need to carefully consider how we can best utilize our resources and bring proven solutions to scale.

What other innovations have you observed that may help to curb college costs? Share your ideas in the comments!

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The Children's Savings Movement Is Growing. You Can Help It Go Even Farther.

By Chris Bernal on 11/30/2015 @ 03:00 PM

Tags: Children's Savings Accounts, Education

Note: This post originally appeared on the 1:1 Fund blog. We are excited to welcome these three new partners. Tomorrow, on Giving Tuesday, you can help support these and other Children's Savings Account programs across the country. Donate on December 1 and the 1:1 Fund will triple your gift!

The 1:1 Fund is happy to announce that we have added three new programs to our list of partners! We’d like to warmly welcome Durham Kids Save, Lansing SAVE and El Monte Promise Foundation’s Scholar Savings Program to the 1:1 Fund family, bringing us to a total of 12 partners across the country. Read on below to learn more about these great programs, or jump straight to our programs page to access their donation portals!

Durham Kids Save

Durham Kids Save is a new children’s savings initiative that was created in partnership with the City of Durham, Durham Public Schools, the East Durham Children’s Initiative and Self-Help Credit Union. Durham Kids Save will launch at Y.E. Smith Elementary School in January 2016, serving all 80 students in this year’s kindergarten class. With success, the partners hope to expand Durham Kids Save to other Durham elementary schools in the future. The goals of Kids Save are to increase college savings and affordability, develop savings habits in children and parents and develop a successful, college/career-bound identity in all students.

Durham Kids Save is one of the key new initiatives that has emerged from a city-wide poverty reduction effort that was initiated by Durham’s mayor, William V. “Bill” Bell. In his 2014 State of the City address, Mayor Bell’s called for action to reduce poverty “neighborhood-by-neighborhood, year-by-year" starting in 2014. Y.E. Smith is the principal elementary school that serves census tract 10.01, the initial focus of the mayor’s poverty reduction initiative.

Learn more about Durham Kids Save here!

Lansing SAVE

Lansing SAVE is the first program of its kind in the state of Michigan and was launched January 16, 2015. Their mission is to ensure that all students have universal access to college savings accounts within a school-based initiative to link savings to school engagement, improve academic performance and increase enrollment and completion of post-secondary education and training. Lansing SAVE is a multilevel collaborative project led by practitioners, advocates, nonprofit and for-profit organizations, institutions of higher education, local government and school district officials. Their goal is to improve academic outcomes, increase access to the financial mainstream and increase asset-building for Lansing’s future generations.

Learn more about Lansing SAVE here!

El Monte Promise Foundation’s Scholars Savings Program

The El Monte Promise Foundation is working to create a seamless cradle to college pathway for the City of El Monte, California and surrounding neighborhoods. They are focused on creating change by institutionalizing and strengthening partnerships between local government, multiple school districts, colleges, businesses, educators, parents and students to strengthen the educational support systems and make college a realistic option for families.

El Monte Promise Foundation launched the Scholars Savings Program to help families start saving for college from a young age. Families can engage in saving for their child’s education by opening a 529 college savings account. El Monte Promise Foundation has set up an incentive structure that builds the habit of saving by rewarding deposit frequency!

Learn more about El Monte Promise Foundation’s Scholars Savings Program here!

On Giving Tuesday, your donation to support the work of these partners and others will go three times further—donate on December 1 and the 1:1 Fund will triple your gift! Check out the full list of participating CSA program here.

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