Children’s Savings Accounts

Children’s Savings Account (CSA) programs are long-term investments often starting at a child’s birth or upon entry into kindergarten but not coming fully to fruition until a child reaches college age. Given this, many outcomes that programs are most interested in, such as college enrollment, cannot be measured for many years after the program is started. Together these ongoing studies will provide important new information about interim outcomes that can provide some indication if the program is on course to reach its long-terms goals. Moreover, using common metrics, we will also be able to compare outcomes across programs as a means to understanding common factors in program impact and development of a college-going identity.

Some ongoing projects, run through the Center on Assets, Education, and Inclusion (AEDI) , are the following:

In Wabash County, Indiana’s Community Foundation Early Award Scholarship Program , we are testing the effects of including early award scholarships with CSAs. This is an important policy test and has implications for changing how we think about traditional scholarship programs. Early results show that adding a scholarship component to CSAs is associated with having higher math scores than if the children had CSAs only. In addition to tracking academic and savings behaviors, we have implemented a comprehensive parent and linked student survey to monitor attitudes and behaviors ranging from parent engagement in current academic activities and discussion of post-secondary goals, to planning/saving for post-secondary education, parent and child health history, socio-emotional development, and financial security. The student survey is focused on assessing components of Identity-Based Motivation and will provide new and important information about the formation of a future orientated/college-going mindset.

Two of the newest programs in AEDI’s portfolio of CSA research are Newaygo County, Michigan’s Kickstart to Career and Minnesota’s CollegeBound Saint Paul . Launched in September 2018 through a partnership between the Fremont Area Community Foundation and ChoiceOne Bank, Kickstart to Career Newaygo County has brought together school systems, communities, and families to build expectations, encourage savings, increase financial education, and assist with career preparation, training, or college expenses. AEDI recently completed data collection for the first of a three-year evaluation utilizing savings account data linked to data from our comprehensive parent survey and an innovative tablet-based approach. The CHAT-E, developed by Dr. Terri Sabol and her team at Northwestern University assesses young children’s understandings of saving for college and the development and internal representation of a college-going identity.

Most recently, AEDI has begun work with the Saint Paul, Minnesota’s Office of Financial Empowerment. Still in its infancy, CollegeBound Saint Paul offers universal and automatic enrollment to all children born in Saint Paul on or after January 1, 2020, and via opt-in enrollment to those who with confidential birth records or those who become a Saint Paul resident before age six. Longitudinal evaluation of CollegeBound Saint Paul will utilize a combination of administrative savings account and program records, a comprehensive parent survey, and rapid-cycle studies to examine not only the nature of savings behaviors and attitudes, but also test the impact of different approaches to increasing account and programmatic activity.

While we continue to accumulate increasingly definitive evidence that families can and will save for their futures, this same research underscores the real limits to families’ ability to save, without compromising their ability to pay for basic needs, as a source of asset accumulation and a viable college affordability strategy. To address this dilemma, AEDI is testing the potential of grocery store Consumer Rewards Cards to help families “change spending into saving.” Preliminary evidence from two randomized control trials (St. Louis, MO and Wabash, IN) indicates that access to a grocery store rewards card that adds money to families’ CSA accounts more than triples the proportion of families engaged in saving activity, particularly for lower-income families. This innovative approach to leveraging the CSA infrastructure by putting money into accounts other than personal savings from income can help make CSAs a more equitable instrument for assess accumulation and a viable tool for saving by all families.
 

AEDI Programs At A Glance

Program Name Program Reach Age Delivery System Program Basics Unique Features
Promise Scholars Wabash County, Indiana 4th-8th Grade Opt-In but must also have Promise Indiana 529 $25 seed; Variety of grade-level specific awards for meeting academic and savings goals Robust community support and engagement
Harold Alfond College Challenge Statewide – Maine Birth Automatically enrolled in CSA but still need to enroll in NextGen 529. Omnibus 529 accounts – children do not have separate accounts $500 seed deposit. No matches or incentives Generous initial seed amount.
1st to use 529 platform to automatically open CSAs for all children
Outreach and age-appropriate education materials
Kickstart to Career Newaygo County, Michigan Kindergarten Opt-Out $50 seed; opportunities to earn up to $50 each subsequent year through 12th grade Classroom visits by ChoiceOne bank 3 times per year; Champion committee determines annual incentives
CollegeBound Saint Paul Resident of Saint Paul, Minnesota Birth Opt-Out for public birth records; Opt-In for private birth records and relocated children < age 6 $50 seed; opportunities for bonuses includes 1st birth deposit and extra seed money for low-income families Robust outreach, community engagement and oversight; flexible use of funds to include vocational and certificate programs

About AEDI

The Center on Assets, Education, and Inclusion’s (AEDI) research has helped to make the case for asset investments in children’s educational attainment, as a lever with which to catalyze upward mobility. Today, policymakers, funders, advocates, and program practitioners rely on AEDI’s findings regarding the potential for children’s savings to improve outcomes along the educational pipeline, while AEDI’s application of Identity-Based Motivation and its utility for explaining the potency of even small-dollar accounts is informing CSA design. As Children’s Savings Account initiatives gain traction throughout the country, AEDI’s research and consultation with CSA programs continue to make critical contributions to the evolving knowledge base and growing asset constituency.

CID Team Members:

William Elliot

External Collaborators:

Dr. Nick Sorensen
Patty Grant
Jenna Smalligan
Muneer Karcher-Ramos