Lessons From UNICEF on Halloween: How Small Donations Can Support Big College Dreams
By Andrea Levere on 10/31/2013 @ 10:00 AM
EDITOR'S NOTE: This article originally appeared on the Huffington Post and you can read it here.
My earliest experience with charity was collecting pennies and nickels in my orange UNICEF box on Halloween. Even as a child, I remember how important it felt to pick up my box at school. I relished watching those coins drop into the UNICEF box as much as I delighted in the candy filling my trick or treat bag. For me, Halloween became as much about helping a needy child in a distant country as counting my sugary Halloween bounty.
Today, as an adult who tries to count how much candy I don't eat, I spend a lot of time thinking about how we can leverage charity in the United States in more effective ways -- to not only provide help to the hungry and homeless but to set struggling children and families on a permanent path out of poverty. Unlike the faraway kids who benefited from UNICEF, these children reside in our own cities and towns, in neighborhoods where hopes and dreams are too often halted by the knowledge that opportunities available to children in high income families are not available to them.
In fact, from the time they are very young, many low-income children (and their parents) assume that the best ticket out of poverty -- a college education -- is prohibitively expensive and therefore not a realistic option.
Such thinking is all the more tragic because with very little effort, each of us has the power to change that scenario. New research shows that low-income students with just $500 or less in college savings are three times more likely to enroll in college and four times more likely to graduate than those without a savings account.
Of course, even saving a small amount is challenging for families who in a given month may have to choose between paying the heating bill and putting food on the table.
That's where we can help.
My organization recently developed an online platform called the 1:1 Fund that allows donors, large and small, to help low-income families save for college by matching their contributions in special children's savings accounts. During the past few years, a growing number of cities and states have launched programs that provide students with children's savings accounts, seeded typically with $50-$100 and earmarked specifically for college. Through the 1:1 Fund, donors help young students and their families grow those accounts with dollar for dollar matches.
The accounts give low-income families the confidence that post-secondary education is a real and attainable goal -- and the incentive to plan and save. Once they know college is possible, students are more likely to take the right courses and exams, win the best scholarships and learn about other forms of financial aid.
They are students like La Terra Cole, a former foster child who participated in a financial education and matched savings account program called the SEED Initiative and is now in her third year of law school at Catholic University in Washington, D.C. "The account gave me a new way to think about the future. I wouldn't have to be defined by poverty," said Cole. "We need to build in a culture of college expectation and then enroll kids in programs like the one I participated in. Less than 3 percent of kids in foster care go on to complete a college degree so we need programs on a larger scale."
Encouraging families to save can also significantly help decrease college debt. Currently, less than 10 percent of students from low-income families graduate from college by their mid-twenties, in large part because they lack the savings to help make up the difference between financial aid and the full cost of tuition. Again though, even a small amount of savings can pay big dividends. Studies show that just $23 a month in a children's savings account grows into $16,000 in savings by age 18, significantly decreasing the burden of college debt.
It is rare to be able to draw such a clear line between charitable dollars and genuine impact. So this Halloween, particularly as UNICEF boxes have become a less common sight, perhaps we should all make a commitment to contribute a few dollars a month to help send a child to college. After all, every child deserves a chance at a real future, but without our help many won't get there.
Check Out the New and Improved 1:1 Fund Website
By Carl Rist on 10/23/2013 @ 09:00 AM
We are very excited to announce the launch of our new website for the 1:1 Fund and invite you to take a look! The 1:1 Fund is a CFED platform that supports the college dreams of low-income children by ensuring that those dreams are matched with savings in the bank. The 1:1 Fund has learned a lot in our first year and we’re striving to create a more interactive, easy to share and exciting platform to match kids’ college dreams dollar for dollar.
Visit the new website to:
- Get the latest updates, read savers stories and donate to a program in your area all from our dynamic program pages.
- Learn about the impact of child savings programs.
- Stay current on what's happening at 1:1 Fund and in the world of children's savings accounts on our blog.
The 1:1 Fund team hopes you enjoy our new website and visit often to see how our child savings programs are doing! Also, if you have any feedback or comments on the new website, our team would love to hear from you.
The 1:1 Fund Expands to New York
By Carl Rist on 10/14/2013 @ 01:30 PM
The 1:1 Fund team was honored to attend an energizing event on October 1 at the Children’s Aid College Prep Charter School in the Bronx that marked our first expansion beyond the 1:1 Fund’s initial two pilot sites (San Francisco Bay Area and Mississippi). With kindergarteners, their parents and a special guest appearance by NFL star, Justin Tuck, and his wife, Lauran, we celebrated the launch of the College Savers Program.
This new and innovative children’s savings program, developed in partnership with Citibank, ideas42 and CFED, and with initial support from Justin and Lauren Tuck’s R.U.S.H. for Literacy, will initially work with 170 children, including 1st and 2nd graders in CAS’s College Prep Charter School and youth participating in CAS’s African American Male Initiative. By the launch, 135 families (or 79%) had already signed up. All participants will receive a Citibank savings account with a $100 initial gift, along with a dollar for dollar match up to the first $100 in savings, a $50 incentive for parents that enroll in automatic bill-pay to contribute to the account and eligibility for raffle prizes by making deposits.
The most exciting part about the launch was the announcement by the Tucks of their $100,000 investment in the College Savers Program (via the 1:1 Fund) and their conversation with parents about their own experiences and their hopes for all of the children in the program. Justin Tuck noted that he and his wife are both fortunate to be Notre Dame graduates and that they want participants “to have the same opportunity we had.”
Since studies show that low-income students with just $500 in a college savings account are three times more likely to enroll in college and four times more likely to graduate, starting to save during the school years is a big step in seizing that opportunity. And it’s also about creating a vision for the future. As Justin Tuck noted in his final remarks at the event: “I believe in you guys and hope you believe in yourselves. I’m your fan, too!”
To see more photos from the event, check out the slideshow below.
Applying “Financial Coaching” for Scale
By Margaret Miley, Guest Contributor on 10/09/2013 @ 11:30 AM
In the field of financial stability, providers seek effective strategies that engender positive changes in the financial circumstances of residents. Often lost in the discussions are environmental factors: wages, local economic conditions, medical coverage, dangerous financial products and a legacy of discrimination in national policies that support the building of individual assets. For example, the erosion of wages for American workers that began in 1973 is a most pressing influence on economic insecurity. The current reality is often that two full-time workers in a household cannot support a family at a survival level, which has a destabilizing effect on the family, the culture and the larger economy. The setting is aggravated by a less-regulated financial marketplace that includes high-cost, unsafe financial products and services, luring consumers into a cycle of debt and insecurity. Within these confines, however, positive individual changes can be cultivated.
In Massachusetts, we have seen an increased need for services, as borne out by more acute financial indicators for residents, such as CFED’s Assets & Opportunity Scorecard data indicating that 48% (~ 2.4 million) of the state’s adults have subprime credit scores and 27% (~1.7 million) do not have enough cash to survive three months with an interruption in income. At the same time, we see reduced investment by the public sector and diminished capacity in the nonprofit sector to address the increased need. This is accompanied by increased pressures for providers to demonstrate “impact” in condensed time periods, such as one-year funding cycles. Clearly, the need for efficiency and scale must be balanced against the promise of deep, transformational, individual assistance. In this challenging context, The Financial Confidence and Coaching Campaign, Midas’s model of “financial coaching,” combines new ingredients learned from years of financial education and asset building, as well as the broader coaching field. More background is provided in our White Paper. Briefly, the strategies include:
- Treating financial coaching as a “method,” not a “service.” Though coaching has a long history, some current writings on financial coaching suggest that service providers be limited to discrete roles of “coach” or “counselor.” However, we see little application for this costly and constraining format. With residents working more than full-time and staff members overburdened, time and funding limitations do not allow for one provider to be a content resource and one to be a purely process-oriented coach, as that would require participants to manage time and relationships with both. With proper training and ongoing peer support, coaches can refine their practice to maintain the participant-led environment while using coaching and counseling methods as appropriate.
- Integrating the “coaching method” into many service delivery contexts. Many disciplines are pursuing integration in service delivery. This conserves resources and reflects a participant-centered approach to service and treatment. Indeed, as medical practitioners have expanded the patient-centered “medical home” model, innovative asset builders have introduced a component of “fiscal health” to cooperatively address the links between financially-induced stress and health issues. Midas has hosted trainings of financial content and the coaching method to providers of matched savings, college access and career development programs to increase their own financial knowledge and to integrate and strengthen coaching techniques in their daily meetings with participants. Initial data and staff feedback have been positive.
- Bringing in the technology. Though in-person meetings are ideal for building a trusting relationship, the current stable of city-based providers cannot serve the need alone. Currently, corporations, schools and professional services have migrated to audio/visual platforms via the web, many with good results. Midas is providing services on these platforms to serve more residents, particularly those with mobility, transportation, scheduling or language issues that limit their access to existing in-person services. The use of appropriate interactive tools, products and services can expand knowledge and sustain engagement.
- Inviting participants to change the world. It is comforting for participants know that financial issues are not theirs alone. Joining efforts to affect policies, enforcement and others’ financial education gives them a sense of community, purpose and larger vision.
- Scaling it up. If we are going to help millions of people, we need to broadly apply coaching techniques into more accessible formats. This involves (1) developing online content and tools to support and update the financial coaches on changes in laws, issues and techniques to continually develop their skills and content (see MassSaves.org for more information), (2) sprinkling coaching and participant-centered components throughout online platforms used by participants, (3) cultivating a narrative by using videos and social media platforms to tell and share stories and connections, and (4) changing the economy by connecting participants with policy discussions on financial services and economics to improve the economic setting that they must navigate.
At Midas, we see great power in the depth, humanity and scalable promise of adding financial coaching to the many efforts to assist residents struggling in this tumultuous economy.
Margaret Miley is Executive Director of the Midas Collaborative in Allson, MA.
Infographic: Why the Economy Needs Fairer Student Loan Rates
Posted on 08/07/2013 @ 10:00 AM
This inforgraphic from Upworthy is definitely worth a share. It makes a pretty good case for the impact of the overall economy of the doubling of student loan rates.
Top Five Reasons Why a College Degree Still Matters
By Blanche Brown on 07/10/2013 @ 03:00 PM
EDITOR'S NOTE: This post originally appeared on the 1:1 Fund's blog and can be read here.
In the recent years following the recession, the value of a college education has been in question. Many articles, like this one in New York magazine, suggest that a college degree is thought to be more of a financial burden than an opportunity for financial growth. Speculation has circulated about the ability of fresh college graduates to find employment. As a college student, I sympathize with these concerns and sometimes worry that after graduation I will be forced to move back in with my parents and work a menial job despite my degree.
Recent studies, however, prove that the skepticism is unfounded. A college degree is still a big part of a successful future and indicative of financial stability. Here are the top five reasons why a college degree still matters:
- College grads still earn more. In 2003, the average full-time, year-round worker in the United States with a four-year college degree earned $49,900blog3 Blanche, 62 percent more than the $30,800 earned by the average full-time, year-round worker with only a high school diploma. Check out more from the College Board’s Education Pays findings.
- College grads' wages are more stable. During the recession, people with four-year college degrees saw a 5 percent drop in wages, compared with a 12 percent decrease for their peers with associate’s degrees, and a 10 percent decline for high school graduates. Check out the Pew Research Center and this New York Times article for more.
- The more you learn, the more you earn. A report from the State Higher Education Executive Officers shows that each additional level of higher education results in additional economic benefits. Read more at the Ticker and the full report.
- College debt is not as high as the headlines might suggest. We hear lots of horror stories about students graduating after borrowing $100,000 dollars to fund their undergraduate education. Actually, less than one percent borrow that much. The actual average debt accumulation among those who do borrow is about $27,000. For more misconceptions, check out this Chicago Tribune article.
- College grads even show non-financial benefits. Still not convinced a college degree is worth the costs? In addition to having an edge in the job market, a college education has been associated with health benefits. Adults with a college education are more likely to maintain a healthier diet, exercise, and have low cholesterol. Read more about the lifestyle effects of a college degree.
Secretary of Education Arne Duncan Visits San Francisco Partner Kindergarten to College
By Michael Chasnow and Blanche Brown on 06/28/2013 @ 10:30 AM
EDITOR'S NOTE: This post originally appeared on the 1:1 Fund's blog and can be read here.
Last week, the City of San Francisco’s Office of Financial Empowerment hosted a conversation with Secretary of Education Arne Duncan about San Francisco’s Kindergarten to College (K2C) effort and the role of children’s savings in supporting the college dreams of all children. As part of the conversation, San Francisco Mayor Edwin M. Lee and Treasurer José Cisneros moderated a roundtable discussion on K2C’s success so far. Since starting three years ago, K2C has opened more than 8,600 college saving accounts, with savers having now accumulated more than $950,000 in college savings.
Other notable panelists included California’s Lt. Governor Gavin Newsom, CFED’s & 1:1 Fund’s Bob Friedman, Citi’s Bob Annibale and school district superintendent Richard Carranza. For media coverage of the event, here’s a story by the San Francisco Chronicle.
Parents and School Leaders Talk College Savings
One of the highlights from the event was an opportunity for several parents and school leaders to share their personal stories about the importance of the K2C program. They brought a real-life perspective to the event that underscored the impact of the program. Dennis Chew, principal of Gordon Lau Elementary, and Michael Lan, a parent of a K2C saver, contributed their thoughts:
Principal Chew: “If the journey of a thousand miles begins with a single step, K2C helps kids take first step [on their college journey].”
Michael Lan (Parent): “Between my wife and me, [we] always intended for our kids to go to college. The issue was [on the] back-burner; now it is front and center. Because we’re talking about college, our daughter is hearing this early. And it’s not just my child – every kid has an account. It sends a message to this generation that we need to do this together. For our children to be in an environment in which they hear the underlying message [about college] is the most powerful thing of all.”
Exciting Campaign for Kindergarten to College
The 1:1 Fund was very happy to attend the event as a partner, and we have been busy all year raising dollars to match the savings of Kindergarten to College savers. Providing a savings match creates a great savings incentive for account holders, especially those coming from a low-income background. In an effort to honor Arne Duncan’s visit and to prepare for this fall’s incoming kindergarten class, the 1:1 Fund has initiated a Fundly campaign.
Every $100 matches an active student saver – please check it out and consider donating. We want to make sure that every incoming kindergartener can have their savings matched, dollar for dollar!
Meet Jamira: A Low-Income Student Turned National Children’s Savings Advocate
By Veronica Weis on 06/11/2013 @ 04:00 PM
Jamira Burley is the Executive Director for the City of Philadelphia Youth Commission and an outspoken advocate of the power of college savings for low-income youth. She recently spoke at a CFED & Opportunity Nation Forum on College Savings in Washington, DC.
Q: Did you grow up thinking that college was a possibility?
As the first of 16 children to graduate from high school and attend college, for a long time, I didn’t think it was even an option. Neither of my parents had graduated from high school, let alone college, and it always just seemed so far out of reach.
Q: How were you able to afford the costs of a college education?
The summer before my senior year of college I decided that I was going to college. So, I applied to every scholarship that I could find and I also was lucky enough to have a full-time job which helped me pay for college and college-related expenses.
Q: What would be the best way to help kids and their parents think about and plan for college?
I think the earlier parents and children start to think about college and preparing is best because it would give them an opportunity to learn and research all of the available options.
From speaking with many of my peers whose families had put aside money for their education, I learned that it didn’t start with a lot of money and parents just saved what they could. So, I think parents and students have to learn and understand their financial options in paying for school but also start saving early, even if it’s a dollar here and there.
Q: What advice would you give to students who might become discouraged and think college might be financially out of reach?
As a person who has worked in education both secondary and post-secondary, I would say that there are way too many options out there, if you look for them. There are a number of scholarships that go unclaimed every year because students don’t apply. I know a lot of people think that it’s all about your GPA but that’s not true. There are a number, hundreds of scholarships, that select awardees on other things besides GPA.
Q: What do you hope to do with your education in the future?
I hope to use my education to enhance the work that I do with youth. My goal is to one day attend law school and help to create policies that will make education more accessible for everyone.
Today is 529 College Savings Day!
By Veronica Weis on 05/29/2013 @ 11:00 AM
Today, May 29, is National 529 College Savings Day, a day to raise awareness about the importance of saving for college with 529 plans. This year, more than 30 states across the country are celebrating 529 day by hosting education sessions, waiving enrollment fees, offering 529 plan scholarships and more. To see an interactive map by The College Savings Plans Network with events nationwide, click here.
To highlight the importance of college savings, we have been sharing student saver stories on the 1:1 Fund's blog this week here. The three-part series features profiles of the participants who spoke with Martha Kanter, Under Secretary of Education, in a Conversation with Savers at the 2012 Assets Learning Conference in Washington, D.C.
Ways to Participate:
Putting College Back Within Reach
By Jeremie Greer on 05/02/2013 @ 10:00 AM
Access to a quality college education has proven to be essential to climbing the economic ladder out of poverty and into the middle class. Unfortunately, runaway tuition and out-of-control student debt have made college an unattainable aspiration for far too many. In a report released earlier this month, the College Board recommends linking two extremely powerful tools for enhancing access to a college education for millions of low income young people: Pell Grants and Children’s Savings Accounts (CSAs).
For more than 30 years, Pell Grants have made the dream of a college education a reality for millions of low-income young people. As a former Pell Grant recipient, I can personally attest to the power of the Pell grant, which made my own college education possible and positioned me to serve in the capacity I do today. However, rapid growth in the uptake of Pell Grants has caused some to question the fiscal sustainability of this powerfully important program.
So, how can Pell be saved? In its report, “Rethinking Pell Grants,” the College Board recommends the creation of “education accounts” aimed at narrowing the financial and information gaps between low-income youth and young people that grow up under more privileged circumstances.
Here is how the recommendation of the College Board would work:
- The federal government would supplement a student’s future Pell Grant by opening an education account for 11- or 12-year-old children who would be eligible for Pell Grants if they were entering college.
- The federal government would then make annual deposits equal to 5-10% of the Pell Grant they would receive if they were enrolled in college. These funds would accrue interest until the child is 17 and ready to expend the funds for college.
- The funds could only be used to pay college expenses.
- Children and parents would receive annual notification of the amount of funds available in their accounts.
The College Board estimates that, if the deposits were equal to 10% of the current average Pell Grant value, at current Pell Grant enrollment levels, the cost of the program would be about $3.7 billion per year. Furthermore, the government would only spend the funds at the point of withdrawal, not when they were credited to the accounts.
As CFED President Andrea Levere often says, “parents will do for their children what they will not do for themselves.” This simple truth has guided CFED’s belief that CSAs are elemental to the economic security and mobility of households, and by extension our country’s economic success. We believe, and research finds, that CSAs can increase college access for low-income individuals and families. Research by Washington University in St. Louis has found that children with college savings accounts in their own names are six times more likely to go to college than children without accounts.
The possibilities evident in these findings have made policymakers at all levels of government take notice. San Francisco’s Kindergarten to College program is pioneering a bold and burgeoning state and local effort to make CSAs widely accessible to all children. More recently, Cuyahoga County, Ohio, announced an effort to open CSAs seeded with $100 for all kindergarteners starting the fall of 2013, while similar initiatives are in planning stages in Colorado and Washington State. Further, Senators Christopher Coons and Marco Rubio have introduced the American Dreams Account Act, which uses existing Department of Education funds to create CSAs for low-income students and to monitor higher education readiness through a personal online savings account.
Bringing together these powerful instruments—Pell Grants and CSAs—has the potential to be a game-changer in the field of college access, and CFED looks forward to working with the College Board to advance these policy recommendations.
Education is One Way to Narrow the Racial Wealth Gap
By Carl Rist on 03/22/2013 @ 10:00 AM
EDITOR'S NOTE: This post originally appeared on the 1:1 Fund's blog and can be read here.
For generations of Americans, graduating from college has been the surest route to achieving the American Dream. Indeed, in his acceptance speech at the Democratic National Convention last September in Charlotte, North Carolina, President Obama noted, “Education was the gateway to opportunity for me.” Yet, the price tag for attending college continues to rise. With tuition and fees for resident students at public four-year colleges and universities rising at an annual rate of 5.6% (from 2001-2011), one has to wonder what this financial barrier means for the future of economic and social opportunity in the United States.
A new report from Brandeis University’s Institute on Assets and Social Policy sheds some light on this question, and the emerging answer is a growing wealth gap, especially along racial lines, resulting from unequal education opportunity. In their report, The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide, the Brandeis researchers find a growing wealth gap between white and African-American families. The main driver of this wealth gap is homeownership, but the Brandeis researchers also identify educational inequality as another key factor, and a major cause of this is paying for college. For example, financial considerations such as rising college costs, the need to work while in school rather than attend full-time, and the concern about taking on high levels of debt result in more African-American students (compared to whites) dropping out of college without a degree. Ultimately, the Brandeis researchers estimate that educational inequality is the fourth most important driver of the racial wealth gap, behind only homeownership, household income and unemployment.
So what’s the solution? Certainly, controlling college costs and ensuring that need-based aid keeps up with inflation are strategies that we, as a nation, must pursue. But there are also things that students, families and communities can do. Since we know that students with a savings account are much more likely to attend and finish college, we need to encourage all families to start saving money early for their children’s higher education. That strategy will have a positive impact on individual families’ financial health, their children’s job prospects and economic opportunities, and the overall health and prosperity of our country. As a nation, though, we’re not great savers, and for students from low-income families, who often are students of color and who will be affected most by the financial hardships of college, the challenge is even greater.
Here at the 1:1 Fund, we believe in the importance of saving for college and want to bring this opportunity to all children, especially students of color and those from lower-income backgrounds. In San Francisco, our partners at Kindergarten to College (K2C) work with every kindergartner in the San Francisco Unified School District, whose students are 41% Asian American, 23% Latino, 11% white, 10% African American, 1% Native American, and 14% other or declined to state. Of all SFUSD students, 26.5% speak English as a second language. In Mississippi, 100% of our student savers are African American and low-income. While the rising cost of college and the limits of need-based aid must be solved at the federal and state levels, individual families and their communities can help offset the financial burden of higher education by saving early and often – the 1:1 Fund exists to help them do just that. Please consider donating to the cause, and matching students’ savings, at www.1to1fund.org.
College Board’s 2013 CollegeKeys Compact Innovation Award Presented to FUEL
By Jimmy Crowell on 02/21/2013 @ 11:00 AM
Last month, at the College Board’s New England Regional Forum, the CollegeKeys Compact Innovation Award was presented to Families United in Educational Leadership (FUEL). FUEL, a Boston-based nonprofit that motivates and assists low-income families trying to access higher education, won the award for demonstrating innovation and success in increasing the number of low-income students entering and completing college. Along with this recognition, the organization will receive $5,000 from the College Board to support their programs.
FUEL, which offers programs that help students save for college, identify local scholarships and prepare for academic success, was also recognized by the College Board for their impact and potential to be replicated and brought to scale. The award is given to high schools, colleges or nonprofit organizations across the country that can demonstrate their efficacy in combating the financial and social barriers that often limit the amount of low to moderate income students that attain college degrees.
“Guided by the College Board’s principles of excellence and equity in education, the Advocacy & Policy Center works to ensure that students from all backgrounds have the opportunity to succeed in college and beyond,” said Christen Pollock, Vice President, College Board Advocacy & Policy Center. “The winning programs embody the mission we seek to fulfill, and we are proud to support them as we work towards a common goal.”
CFED’s President, Andrea Levere, has also been an advocate for FUEL’s expansion and development by serving on their Advisory Board. CFED applauds FUEL for their award and for their dedication to bringing incentivized college savings accounts to low-income students.
You Might Also Like
The Academic BCS
By Sean Luechtefeld on 12/11/2012 @ 04:30 PM
Today, New America Foundation’s 2012 Academic BCS standings were released. Let me start out by saying that these rankings are far preferable to the actual BCS rankings.
Certainly, I understand that this is a fun way to get people thinking about college success and about the race gap that exists in education. For these purposes, I think New America’s Higher Ed Watch deserves applause. Yet, I think that the Academic BCS rankings call into a question an important point about how we measure college success.
Now, in the interest of full disclosure, I am a proud Florida State grad and was a bit disappointed that my Seminoles came in last place. But, rest assured, that pride doesn’t implicate my bias on this topic; I also worked for three summers at Northwestern and my sister did her undergraduate work at NIU. As a native Illinoisan, I’m actually quite pleased to see the Huskies and the Wildcats at the top of this list.
Nevertheless, the teacher in me takes issue with the methodology here, because it places a lot of emphasis on whether the graduation rate among football players is higher than the graduation rate among the student body more generally. While increased graduation rates is the goal, too often, student-athletes are successful in part thanks to help from programs that, although effective, aren’t accessible to the entire student body.
Rather than focusing on college success for football players, then, the conversation needs to be broadened to focus on primary predictors of college success for all students. One such predictor is whether or not a student – well before they even apply to college – has a savings account for college in their name. Research finds that those students with college savings accounts from a young age are six times more likely to finish a college degree when compared with their non-account-holding counterparts. The benefit: not only can we overcome the race gap in higher education, but we can also begin to address what Jennifer Brooks calls the “aspiration gap.”
Programs that seed accounts for families with young children for the purposes of higher education are gaining steam across the country. Just last month, Cuyahoga County, Ohio announced that it is starting a universal college savings program. Likewise, the State of Colorado is in the process of piloting a program that would create Children’s Savings Accounts for all TANF recipients. Initiatives like these are essential if we are to get serious about the changing nature (read: increase cost) of higher education.
While my Seminole pride makes me wish FSU performed a bit better, I think New America’s Academic BCS rankings are an important starting point to discuss means by which we can improve college access and success, and I applaud their efforts to mainstream this conversation.
Cuyahoga County Will Offer Universal College Savings Accounts to All Kindergarteners
By Kori Hattemer on 11/30/2012 @ 10:00 AM
In Ohio, Cuyahoga County today announced a new initiative to open a college savings account for every incoming kindergartener in the county, which includes Cleveland. Championed by County Executive Ed FitzGerald, the program is the largest effort to offer child savings program in the U.S. and will serve about 15,000 students in public, private, charter and parochial schools.
Cuyahoga County will start by enrolling 25% of kindergarteners in the program in fall 2013 and plans to enroll 100 percent of incoming kindergarteners by fall 2015. The county will seed each account with a $100 initial deposit that can be used for any postsecondary education, including vocational training as well as two- and four-year colleges. The program will also include a financial education component and is part of an accelerating trend to begin teaching saving and money management skills to both children and their parents.
The Cuyahoga County initiative is part of a growing national movement at the state and local level to help low-income children and families learn how to save for college and manage their finances. It follows a similar effort launched in San Francisco, now entering its third year, that provides a $50 deposit to public school kindergarteners, and a pilot program recently started in Mississippi. A number of other large-scale initiatives are also in development. The emergence of these programs reflects increasing recognition by local and state governments that even a small amount of savings can have a dramatic impact on long-term expectations, particularly for low-income children who may otherwise grow up believing college is out of reach.
Success Story: New Financial Education Workshop in Texas
By Julian Mensah, Guest Contributor on 11/16/2012 @ 03:30 PM
Literacy Instruction for Texas has been at the forefront of helping improve the literacy rate in Dallas for over fifty years. All of our adult low-level literacy classes are taught by volunteer instructors. We firmly believe that it's unacceptable that 21% of adults in the 11 county vicinity of North Texas are functionally illiterate.
We've recently begun to focus more on financial literacy by partnering with YWDallas to offer our students a financial educational workshop. We had the opportunity to attend the 2012 Assets Learning Conference and realize education and financial stability go hand in hand.
Just this week, three students were the first to graduate from the Financial Educational Workshop. We owe a big thank you to YWDallas for administering the workshop on our grounds! These three are now eligible for Individual Development Accounts (IDAs).
Assets & Opportunity Network Tells CFPB What Effective Financial Education Looks Like
By Jennifer Brooks on 11/09/2012 @ 02:00 PM
In one of its first collective actions, the Assets & Opportunity Network sent comments to the Consumer Financial Protection Bureau (CFPB) on what works and what doesn’t to build financial capability.
The comment letter, which you can read here, identifies two pressing challenges to making financial education effective. First, it argues, there is behavioral resistance; many people who need financial education the most are not open to receiving it. Second, there is no agreed-upon definition of “financial capability,” nor is there a clear and coherent means of assessing the effectiveness of financial education programs.
Addressing each of these gaps will need to be central to CFPB’s efforts to build financial capability. As the Network argues in the Letter, “if our ultimate goal is to raise the general financial capability of American households, we will need to reach beyond the households who are already receptive to new information and behavior change. Behavioral resistance to financial education must be understood, confronted and overcome. If we fail in this endeavor, households who don’t get the benefit of financial education will only fall further behind in their own financial security, while at the same time posing a ‘systemic risk’ to the nation’s overall financial health.”
CFED and the 60 Assets & Opportunity Network organizations applaud the CFPB’s efforts to bolster financial capability and invite you to read the Comment Letter and learn more about some of the challenges facing this important endeavor.
The Following Organizations Signed Onto This Letter:
- AAA Fair Credit Foundation
- AHEAD, Inc.
- Bilbrew Consulting Services, LLC
- Center for Asset Building Opportunities (CABO)
- Cambridge Economic Opportunity Committee, Inc.
- Catholic Charities of Maine
- CHANGE, Inc,
- Chautauqua Opportunities Inc.
- ClearPoint Credit Counseling Solutions
- Coalition for the Advancement of Financial Education, Montgomery, Maryland
- Coastal Enterprises, Inc.
- Community Action Board of Montgomery County, Maryland
- Community Action Partnership of Utah
- Delta Citizens Alliance
- Doorways to Dreams (D2D) Fund
- Florida Prosperity Partnership
- Glory Temple Ministries, Inc.
- Haven Neighborhood Services
- Hawaii Alliance for Community-Based Economic Development
- Innovative Changes
- KaizenRhino Solutions International
- Keiser Consulting, LLC
- Kemetic Business Consultants (KBC)
- Lower Columbia Community Action Council
- Lucy Gorham (A&O Network Steering Committee Member)
- Maryland CASH Campaign
- Midas Collaborative
- Mission Asset Fund
- Mutual Housing California
- National Community Tax Coalition
- Neighborhood Partnerships
- New York State Community Action Association
- Oklahoma Policy Institute
- Opportunity Fund
- Our Daily Bread, Inc.
- Partners for Prosperity
- Pathfinder Community Connections
- Peaceful Paths Domestic Abuse Network
- Pine Hills Community Development Corporation
- RAISE Texas
- Real$ense Prosperity Campaign
- Rural Dynamics, Inc.
- Sage Financial Solutions
- Southern Bancorp Community Partners
- Step Up Savannah
- Suncoast Community Capital
- Supports to Encourage Low-Income Families (SELF)
- Tacoma Housing Authority
- The Coalition for Debtor Education
- Treasure Island Homeless Development Initiative
- Turtle Mountain CDFI
- United Way of Greater Houston
- United Way of Northeast Florida
- United Way of the Costal Bend
- Urban Enterprise Association of Richmond
- Woodstock Institute
- Yakima County Asset Building Coalition
- YWCA Delaware
From the Woodstock Institute President: An Empty-nester’s Hopes For All Children to Have College Opportunities
By Dory Rand on 10/25/2012 @ 03:45 PM
EDITOR'S NOTE: This post originally appeared on the Woodstock Institute blog. Many thanks to Dory Rand for writing this thoughtful piece and allowing us to share it on our site.
All children deserve the opportunity to pursue their dreams of becoming a veterinarian, astronaut, teacher, or whatever they desire. Without an education, however, many of these dreams will remain unattainable, as will the economic mobility these careers provide. Knowing that there’s a plan in place and savings accumulating for college is a strong motivator for many children, but too few children have the security of a college nest egg.
My children’s experience is a testament to the power of college savings. Having an affordable, fixed-rate, long-term mortgage allowed me to also set aside money for my children’s college education. Despite ups and downs in the stock market and some losses in my kids’ college savings plans, significant savings accumulated because we started saving for their postsecondary education as soon as they were born. The savings were not sufficient to cover all of their college costs—they still need scholarships, grants, savings from summer jobs, and help from parents and grandparents—but they were large enough so that my kids never doubted that they would have the financial wherewithal to go to college.
At Woodstock, we’re working towards a future where all children could grow up with a savings account started at birth like my kids had. Research shows that children with a savings account in their name are six times more likely to attend college than children without such accounts, and that having financial and non-financial assets (such as equity in a house, vehicle or business) is positively correlated with attending and completing college. Controlling for other factors, including income, assets have a significant, positive effect both in terms of financial ability to attend college and in the aspirational impact on children and parents.
While the day that all children have savings accounts at birth is a ways off, there are steps we can take now to expand access to postsecondary education for more children. The Illinois Asset Building Group is urging that we take the following steps:
- The State Treasurer, who administers Illinois’ Bright Start 529 College Savings Plan, should provide a safe, conservative, default 529 investment plan for new applicants to simplify the process for families with little or no investment experience.
- The State Treasurer should accept Individual Taxpayer Identification Numbers (ITINs) in lieu of Social Security numbers for Bright Start account owner parents or guardians so that American children of immigrants can participate in the program. (UPDATE, 10/11: We are pleased that the Office of the State Treasurer has informed us that the Bright Start program recently started accepting ITINs in lieu of Social Security Numbers).
- The State of Illinois should create a college savings incentive program for children of noncustodial parents who owe child support arrears.
- The State of Illinois should eliminate requirements in the Temporary Assistance for Needy Families (TANF) program that disqualify applicants with more than $2,000 in assets or exempt education savings accounts from the asset limit so that parents of minor children who are in need of short-term cash assistance are not discouraged from, or penalized for, saving for their children’s postsecondary education. (Six states have already abolished TANF asset limits.)
I strongly support these policy recommendations and look forward to the day that all Illinois children can have savings accounts from birth that will help them to achieve their dreams.
Matching the Promise
By Kori Hattemer on 10/19/2012 @ 11:30 AM
According to a recent study by EARN, 87% of parents believe that attaining a college degree is an important opportunity for their children, but 53% of them are very or extremely concerned about affording college. Other research indicates that among youth who expect to attend college, those who have a college savings account are four to six times more likely to actually attend. Yet many families who want to save for their children’s education may struggle to do so, especially low- and moderate-income families who are overwhelmed by competing financial needs and who may not have access to savings mechanisms.
More and more state and local governments are paying attention to this issue. Nationally, momentum is building in the public sector to incentivize and help families save for college. States and localities around the country are developing innovative college savings initiatives like the recently-announced Texas Match the Promise Foundation®, a state-sponsored nonprofit organization created by the legislature specifically to solicit and receive matching funds designated for higher education. The Texas Match the Promise Foundation will offer matching scholarships to up to 150 low- and moderate-income Texas students to help them save for college through the Texas Tuition Promise Fund®, Texas’ prepaid tuition plan that allows families to save for their children to attend college.
The Texas Match the Promise Foundation® is currently accepting applications from Texas residents who:
- Are in grades six to nine.
- Have a family income of $75,000 or less.
- Enroll or are already enrolled in the Texas Tuition Promise Fund®.
- Contribute a minimum of $100 to their Promise Fund.
- Submit an essay about the career they are interested in and why.
Up to 150 selected students will receive a Matching Scholarship of up to $500 to match the amount the family or individual has contributed to the Tuition Fund. The top five applicants will receive a one-time $2,000 Promise Scholarship. Students can re-apply for the Matching Scholarship in the future, but may only receive the Promise Scholarship once.
Initiatives like the Texas Match the Promise Foundation are expanding economic opportunity by empowering low- and moderate-income families to save money that will help their kids gain access to higher education and achieve a college degree. State policies have the potential to broaden the impact of matched savings accounts and provide more opportunities to low- and moderate-income families to invest in their kids’ futures. Fifteen states currently incent savings for some families through matching grant programs or tax credits, as outlined in CFED’s Assets & Opportunity Scorecard.
The public sector has an important role to play in encouraging savings for higher education – and a growing number of governments are capitalizing on this opportunity. We applaud the good work done in Texas and other states, and will continue to work with other state and local governments to develop similarly innovative policies and initiatives that help kids and families save for brighter futures.
Investing in Children Early Increases Access to Education
By Carl Rist on 08/07/2012 @ 10:00 AM
A new blog posted on the U.S. News Education blog and written by Equal Justice Works highlights the relationship between Children’s Savings Accounts (CSAs) and educational outcomes. Much of the research cited by the blog’s author has been conducted by William Elliott from AEDI. In summarizing this research, the blog’s author writes, “The bottom line is that savings are positively associated with educational aspirations and achievement, keeping low-income children college-bound despite limited financial resources. Federal aid can help, but student debt is becoming more and more of a barrier. [...] We need more programs like K2C and SEED, which overcome the institutional and financial barriers that cause so many students to relinquish college dreams at an early age, so that higher education really is accessible to all. Only then can it fulfill its role as a great equalizer.”
To read more about this research, visit the Equal Justice Works post on the U.S. News Education blog.
Equal Justice Works is a nonprofit organization dedicated to mobilizing the next generation of lawyers committed to equal justice.
Will Student Loans be the Next Mortgage Crisis?
By Bob Hildreth, Guest Contributor on 07/23/2012 @ 01:30 PM
One trillion dollars in student debt is creating a crushing burden on millions of young Americans. But colleges are equally at-risk; deprived of the loans on which they’ve become dependent, they would face a severe financial crisis.
Colleges have dramatically increased their reliance on student loans, with government loans approaching the equivalent of 90 percent of total tuition and fees, according to The National Center for Education Statistics. Private student loans create additional dependency.
College administrators are adamant that student loans are not their problem, that they are merely bystanders to student loan default. After all, they have already received and spent the money; repayment, they say, is the problem of the government and private lenders.
If only a small number of students defaulted, these administrators would be right. But if millions start missing payments — and it’s already close to one million today, according to the NCES — the losses could compromise the government’s ability to lend. Then, colleges would have a serious problem. Already, student defaults have reached close to 9 percent, the same rate at which the recent mortgage meltdown began. If all student “problem” debts, including those forgiven and in forbearance, were considered, the real distressed rate on student loans would be an alarming 20-plus percent.
Contrary to economic theory, student debt grows in good times and bad. Mortgage, credit card, and car loan debt levels all fell during the 2008 financial crisis. Why didn’t student loan debt? Because colleges needed the money. Financial aid officers added more and more borrowing into their student awards to fill the gap between rising college costs and declining family income. The government aided in this process by offering loans, in efforts to increase college attendance.
A student loan reckoning is approaching, just when the financial positions of the government and many colleges are deteriorating. Post-election deficit plans will probably include sharp cuts in student aid, which has grown to almost half of the US Department of Education’s entire budget. Fewer Pell Grants will increase the need for loans, just when many states, most notably California, reduce spending on higher education.
Colleges are also suffering. Moody’s Investors Service has warned that college and university revenue growth will slow significantly in coming years, posting a negative outlook for a majority of these institutions, excepting those with large endowments.
The landscape after millions of students default on loans would be bleak. Public schools would be forced to seek more funding from states, while traditional private schools would fall back on their endowments. The richest colleges would gain market share of the brightest students. And for-profit schools, the most dependent on federal student loans, would suffer most.
California offers a sobering example. State budget cuts have ravished its prestigious higher education system, requiring students to wait years to enroll in foundational classes.. Business and other schools with independently strong endowments are attempting to break away from their harder-hit university systems. The governor is threatening to do away with entire campuses, if Californians fail to raise taxes.
Massachusetts may fare worse than California. Higher education is a mainstay of our economy, accounting for almost half a million jobs; some communities rely on a nearby college as the biggest local employer. What the petroleum price is to Houston, the price of tuition is to our state. If tuition rates suffered a sharp decline, our workforce would, as well.
To avoid a student loan crisis, colleges must find ways to close their financial gaps without relying so heavily on student loans. The government should determine whether colleges are capable of using other resources, such as endowments, to withstand lending cutbacks.
College is a critical investment, but we have made it an extremely risky one. The student loan bubble will burst once it reaches $1 trillion to $2 trillion, bringing down students and colleges with it. Let’s act now to stop another financial disaster.
Bob Hildreth is Founder of Families United in Educational Leadership, a nonprofit that helps low-income families save and plan for their children's educational futures. This op-ed originally appeared in the Boston Globe.
Currently reading page 1 of 2.