Center on Assets, Education, and Inclusion

Lessons Learned from Children’s Savings Account Programs: Tools to Leverage Spending to Facilitate Saving among Low-Income Families

Key Insights

• Educators, policymakers, and advocates concerned about persistent achievement gaps, stagnant upward mobility, and college unaffordability are increasingly turning to Children’s Savings Accounts (CSAs) as a policy intervention for catalyzing educational opportunity and greater equity.
• While state-run 529 college savings plans largely benefit middle- and upper-income families, these financial instruments can serve as platforms for CSAs in ways that help to more equally distribute the benefits of college savings systems.
• Asset accumulation in CSAs can be substantial. For example, some CSA models can help families accumulate as much as $31,483 by the time their child reaches 18, if they start to save at birth, use an investment vehicle such as a 529, and receive transfers and incentives that amplify their savings efforts (here, assuming an initial deposit of $500, annual family savings of $600, and $300 in savings matches).
• The provision of CSAs and the supports and features that accompany them results in family savings rates between 8% to 30% for opt-out CSA programs and about 40% to 46% for opt-in CSA programs. While this saving reflects authentic engagement and, often, considerable family sacrifice, CSA programs have been in search of a solution to increase saving.
• Combining CSAs with reward card programs may be one way to improve saving outcomes and increase wealth accumulation, particularly among low-income families whose ability to divert resources from consumption to saving is necessarily limited. 

Children’s Savings Account Program: School Outcomes Report

Findings from this study and past studies suggest that a CSA alone may not catalyze improvements in attendance, math, and reading; it may take some engagement with the accounts. But, while these findings are promising, they are not definitive and more research is needed. This is perhaps particularly notable given the relatively small K2C account balances at this stage (average total value of accounts that have had at least one family contribution is approximately $907 by the fourth year; average contribution value of $709).

January 2018

This is a quarterly newsletter produced by the Center on Assets, Education, and Inclusion (AEDI) at the University of Michigan School of Social Work.

Read the AEDI January 2018 Newsletter.

In this issue:

• New Research on Savings in CSAs

• Report from the Michigan Consortium

• Investigating Math/Reading outcomes for accountholders in SF's K2C

• Asset Building in the Foster Care Sysyem

• Leveraging spending to fuel families' savings

Making Education Work for the Poor, The Potential of Children's Savings Accounts

Willliam Elliott and Melinda Lewis

• Uses authors' personal stories to illustrate inequities in education system

• Features research conducted with a clear public purpose in mind, in order to increase the relevance and applicability of findings to public policy conversations

• Considers how research resonates with people's values and how the proposed policy intervention aligns with American ideals

• Discusses an opportunity pipeline that begins at or near birth and extends beyond graduation into young adulthood

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