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. 

White Americans Have a Reason to Be Mad about Wealth Inequality

Information about the nature and extent of wealth inequality among Whites can play a role in eliminating misconceptions and reframing the discussion about wealth redistribution as essential to restoring hope in the American dream and imperative to improving the life chances of all. Using data from the Panel Study of Income Dynamics, we find that the top quintile of White wealth holders has 212 times as much wealth as the bottom quintile. Further, multi-dimensional descriptive analyses from 1999 to 2015 indicate that median wealth has increased 46% among White households in the top 20% of both the wealth and income distributions. During the same time period, wealth holdings decreased among White household in the bottom 20% of both economic distributions. These data suggest that wealth inequality is a problem not only for Black households in America, but for White households as well. Thus, wealth inequality is not just a question of discrimination and racial disadvantage but is rooted in the fundamental nature of the American economy.

Read the brief »

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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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