Center on Assets, Education, and Inclusion

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  1. 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.

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    Authors

    William Elliott, Elizabeth Burland, Briana Starks, Trina Shanks

    Working Paper Year 2019

  2. Children’s Savings Account Program

    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).

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    Authors

    William Elliott, Melinda Lewis, Megan O'Brien, Christina LiCalsi, Leah Brown, Natalie Tucker, Nicholas Sorensen

    CSA Report Year 2018

  3. January 2018 Newsletter

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    Authors

    AEDI

    Newsletter Year 2018

  4. 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. 

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    Authors

    William Elliott

    CSA Report Year 2018

  5. Can Post Offices Increase Access to Financial Services?

    Postal banking through the US Postal Service has been recommended as one option for improving the availability of safe and affordable financial products and services in lower-income and minority communities. Advocates of postal banking suggest that post offices have maintained their presence in communities vacated by banks and credit unions and inundated by alternative financial service (AFS) providers. However, there have been few attempts to analyze data in order to test this assumption. Using financial services and community demographic data for 31,489 zip codes across the US, we compared the concentrations or densities of bank and credit union branches, AFS, and post offices.

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    Citation

    Despard, M., Friedline, T., & Refior, K. (2017). Can post offices increase access to financial services? A geographic investigation of financial services availability. Lawrence, KS: University of Kansas, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Despard, Mathieu R., Friedline, Terri, Refior, Kevin

    Financial Inclusion Report Year 2017

  6. Contribution Activity and Asset Accumulation in a Universal Children’s Savings Account Program

    San Francisco’s Kindergarten-to-College (K2C) is a Children’s Savings Account (CSA) program that provides a savings account to all kindergartners in the public school system to save for postsecondary education. This study is the first analysis of families’ contributions to the K2C accounts and how those contributions vary by student characteristic and school context. Following a review of existing research regarding college saving by American families in general and, specifically, by those participating in other CSA programs, this study examines contributions as one manifestation of families’ engagement with the K2C accounts. In addition, the study explores how the particular features of the K2C program manifest in asset accumulation and contribution activity, as well as how individual and school-level characteristics may influence observed interactions with the K2C accounts. This research provides insights into a CSA program that is the oldest and one of the largest in the country, and it offers lessons for policymakers and CSA administrators considering interventions to encourage college saving among families with school-age children.

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    Authors

    William Elliott, Melinda Lewis, Megan O'Brien, Christina LiCalsi, Leah Brown, Natalie Tucker, Nicholas Sorensen

    CSA Report Year 2017

  7. Do Metropolitan Areas have Equal Access to Banking?

    Metropolitan areas are places where the majority of residents in the US live and work. Each of these areas has unique features regarding education, employment, public transit options, arts, recreation, and worship opportunities. Each metropolitan area also has a unique financial services landscape – a mix of both mainstream and alternative financial services, which may offer households different types of products and services to help manage resources and make ends meet.

    While prior research has examined the geo-spatial distribution of mainstream and alternative financial services within particular cities and metropolitan areas, little is known about how the availability of these services varies across metropolitan areas for the entire country. For instance, what is the availability of financial services in the Kansas City area, where the “snowbelt” city’s poverty rate is slightly higher than the national average, 30% of residents are Black, the population is growing, and the Federal Reserve and FDIC both have branches? And, how does the availability of Kansas City area’s financial services compare to that of the Detroit area, where the “rustbelt” city’s poverty rate is nearly three times the national average, 83% of residents are Black, the population is shrinking, and major manufacturing companies are closing? Or the Riverside, CA area, a “sunbelt” city located in the San Joaquin Valley with an agriculture-based economy, a poverty rate that is higher than the national average, and a Latino population of 48%? Variation in this availability may indicate that households living in different communities have greater or lesser access to financial services to promote financial stability.

    Using financial services and community demographic data for 356 metropolitan statistical areas (MSAs) across the US, we compared the concentrations or densities of bank and credit union branches and alternative financial services.

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    Citation

    Despard, M., & Friedline, T. (2017). Do metropolitan areas have equal access to banking? A geographic investigation of financial services availability. Lawrence, KS: University of Kansas, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Despard, Mathieu R., Friedline, Terri

    Financial Inclusion Report Year 2017

  8. HAROLD ALFOND COLLEGE CHALLENGE (HACC) 2017 SAVINGS BRIEF

    At its inception, the Harold Alfond College Challenge (HACC) offered a $500 grant to every Maine resident infant for whom a NextGen account was opened by the baby’s first birthday. Enrollment involved a two-step process, including an addendum to the NextGen application, required in order to accept the Alfond Grant. While the money for the $500 HACC grants comes entirely from the Harold Alfond Foundation (a private family foundation) and is granted initially to the Alfond Scholarship Foundation (a 501(c)3 nonprofit) before being invested for eligible Maine babies, the state is an important partner, providing the delivery system of the 529 college savings plan (NextGen), matching and auto-funding incentive grants, and data-sharing. NextGen accountholders can get a 50% match on their contributions, automatically deposited for qualifying contributions, up to a maximum annual match of $300, with no lifetime limit or income threshold1. In addition, NextGen accounts set up with automatic deposits are eligible for a one-time additional $100 match from Finance Authority of Maine (FAME). Accountholders who make contributions to NextGen accounts may also benefit from tax advantages associated with 529s.

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    Authors

    Center on Assets, Education and Inclusion

    CSA Brief Year 2017

  9. Harold Alfond College Challenge (HACC) 2017 Savings Report for Households Who Opted-In to the Program from 2008 to 2013

    New This report provides a preliminary descriptive examination of aspects of Maine’s Harold Alfond College Challenge (HACC) Children’s Savings Account (CSA) Program1. Specifically, the Center on Assets, Education, and Inclusion (AEDI) uses data provided by the Finance Authority of Maine (FAME) for NextGen College Investing Plan, Maine’s 529 college savings plan (NextGen or Next College Investing Plan) accounts opened as part of the HACC pilot in 2008 and the statewide opt-in CSA program in 2009-2013 to consider how account opening and family contribution differ by family income and across time, as well as how family saving and HACC features contribute to asset accumulation by these households.

    This report is the first product of a research partnership between the Alfond Scholarship Foundation and AEDI. Future research will center on more rigorous analysis of the savings data described here, as well as examination of outcomes for children enrolled after the Harold Alfond College Challenge shifted in March 2014 to automatically award the $500 Alfond Grant to all children born Maine residents, rather than requiring families to first open a NextGen account. Additional research will also include qualitative consideration of families’ experiences with the HACC and planned surveys to assess effects on academic achievement, college-saver identity development, and educational expectations in both the opt-in and current, opt-out, iterations of the HACC. Given the prominence of the Harold Alfond College Challenge in the CSA field, considering how Maine’s CSA is affecting financial and other preparation for college and how those effects may transform children’s outcomes may have important policy implications.

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    Authors

    Megan O'Brien, Melinda Lewis, Eui Jin Jung, William Elliott

    CSA Report Year 2017

  10. In San Francisco’s Kindergarten to College Children’s Savings Account Program, Families Save, Assets Accumulate, and Gaps Close

    Children’s savings accounts (CSAs) seek to build assets for children to use for long-term investments such as college or other postsecondary education.  Although CSAs are administered through financial institutions such as banks or state 529 college savings plans, CSAs are more than just accounts. They include features such as initial deposits and savings matches to make saving easier and more successful, particularly for families disadvantaged by low incomes and/or other obstacles.

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    Authors

    Center on Assets, Education and Inclusion

    CSA Brief Year 2017

  11. Investing in the Future

    Households need access to financial services that enhance their long-term financial health by providing opportunities to accumulate assets and build credit. Under this purview, banks and credit unions can be used for future investment, and alternative financial service (AFS) providers have been heavily critiqued for their role in undermining households’ long-term financial health. The types of financial services available within the community may be associated with financial health, improving or impeding a household’s ability to invest in the future, maintain a manageable level of debt, and achieve long-term goals.

    This study used data on financial services, individual/household and community demographics (including smartphone use), and household financial health to test whether the geographic concentrations or densities of bank and credit union branches and AFS providers within communities were associated with households’ financial health. We used two measures of financial services: the numbers of financial services per 1,000 population, or densities, and the composition of financial services densities relative to one another. We explored these associations by income as the availability of financial services within communities varies based on household income levels.

    The findings from this study are not intended to be used for drawing clear prescriptions about building brick-and-mortar branches in communities. Instead, these findings offer preliminary understandings of whether the availability of financial services in communities relates to households’ financial health, for which households, and under what conditions.

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    Citation

    Friedline, T., Despard, M., & West, S. (2017). Investing in the future: A geographic investigation of brick-and-mortar financial services and households’ financial health. Lawrence, KS: University of Kansas, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Friedline, Terri, Despard, Mathieu R., West, Stacia

    Financial Inclusion Report Year 2017

  12. Mapping Financial Opportunity

    The Mapping Financial Opportunity (#MapFinOpp) project was designed to investigate financial inclusion and health from a system perspective. In particular, the project aimed to understand variations in communities’ financial services, whether variations were based on communities’ racial and economic compositions, and whether these variations within communities were associated with households’ financial health. In addition, because the safety and affordability of financial products and services also matter, Mapping Financial Opportunity conducted surveys with random samples of banks, credit unions, and payday lenders to gain an understanding of how much consumers could expect to pay for entry-level products from the financial services within their communities. That is, just because a person has a bank in their community does not mean they can afford the minimum opening deposit or monthly maintenance fees. Thus, the project had four primary components, each relying on slightly different data: 

    • Interactive, web-based platform1;
    • Community analyses;
    • Household analyses; and
    • Product surveys.

    This report provides a summary of the project’s main findings in each of these four components, as well as key dissemination activities and plans for next steps.

     

    1Please visit the website here: https://www.newamerica.org/in-depth/mapping-financial-opportunity/

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    Citation

    Friedline, T., & Despard, M. (2017). Mapping financial opportunity: Final report. Ann Arbor, MI: University of Michigan, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Terri Friedline, Mathieu Despard

    Financial Inclusion Report Year 2017

  13. Navigating Day-to-Day Finances

    A household with good financial health owns basic financial products and uses these products to navigate their day-to-day financial needs, such as managing and paying their bills. However, one potential pitfall that households may face as they try to navigate their finances is that certain types of financial services may not be readily available in the communities where they live. For example, the availability of banks, credit unions, or alternative financial service (AFS) providers in a household’s community may be limited. Hence, a household may be drawn to certain types of financial services that may improve or impede their ability to sustain good financial health, depending on the services that are most geographically convenient.

    This study used data on financial services, individual/household and community demographics (including smartphone use), and household financial health to test whether the geographic concentrations or densities of bank and credit union branches and AFS providers within communities were associated with households’ financial health. We used two measures of financial services: the numbers of financial services per 1,000 population, or densities, and the composition of financial services densities relative to one another. We explored these associations by income as the availability of financial services within communities varies based on household income levels.

    The findings from this study are not intended to be used for drawing clear prescriptions about building brick-and-mortar branches in communities. Instead, these findings offer preliminary understandings of whether the availability of financial services in communities relates to households’ financial health, for which households, and under what conditions.

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    Citation

    Friedline, T., Despard, M., & West, S. (2017). Navigating day-to-day finances: A geographic investigation of brick-and-mortar financial services and households’ financial health. Lawrence, KS: University of Kansas, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Friedline, Terri, Despard, Mathieu R., West, Stacia

    Financial Inclusion Report Year 2017

  14. PROMISE INDIANA 2017 SAVINGS BRIEF

    Promise Indiana is a state-supported and community-driven Children Savings Account intervention designed to equip young children and their families with the financial resources, college-bound identities, community support, and savings behaviors associated with positive educational outcomes. In addition to facilitated opening of a CollegeChoice 529 college savings plan account, children receive a $25 initial seed deposit and, if they contribute or raise $25, up to $100 in additional match.

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    Authors

    Center on Assets, Education and Inclusion

    CSA Brief Year 2017

  15. PROSPERITY KIDS 2017 SAVINGS BRIEF

    New Mexico’s Prosperity Kids Children’s Savings Account (CSA) program provides incentives, financial education, and peer support to encourage participants, most of whom are relatively low-income Latino families, to save for their children’s futures. Nonprofit Prosperity Works leverages social networks and community partnerships in the Albuquerque, New Mexico area to recruit accountholders. While the particular features are somewhat unique, Prosperity Kids evidences the hallmarks of Children’s Savings Account policy: initial seed deposits, facilitated or universal account opening, savings incentives, and long-term asset ownership2. Those who open Prosperity Kids CSAs receive a $100 initial deposit and up to $200 in a 1:1 match for their savings per year, over ten years.3 Parents may also earn benchmark deposits for completing activities associated with child development and academic achievement. As is the case in many CSA programs, these incentives are financed with a mix of philanthropic and public dollars. Prosperity Kids accounts are custodial, held by Prosperity Works until used for postsecondary education or, when the child turns 23, for ‘transition to a stable adulthood’, such as homeownership or entrepreneurship.

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    Authors

    Center on Assets, Education and Inclusion

    CSA Brief Year 2017

  16. Resilient in the Midst of Financial Change

    A household’s ability to adjust to changing financial circumstances provides evidence of good financial health and demonstrates their resilience in the face of unexpected financial emergencies. To reinforce their resilience, households may use savings, credit, and insurance from financial services such as banks, credit unions, and alternative financial service (AFS) providers. The types of financial services available within the community may be associated with resilience, improving or impeding a household’s ability to save for emergencies or access credit.

    This study used data on financial services, individual/household and community demographics (including smartphone use), and household financial health to test whether the geographic concentrations or densities of bank and credit union branches and AFS providers within communities were associated with households’ financial health. We explored these associations by income given that households may be exposed to varying densities of financial services within communities based on their income levels.

    The findings from this study are not intended to be used for drawing clear prescriptions about building brick-and-mortar branches in communities. Instead, these findings offer preliminary understandings of whether the availability of financial services in communities relates to households’ financial health, for which households, and under what conditions.

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    Citation

    Friedline, T., Despard, M., & West, S. (2017). Resilient in the midst of financial change: A geographic investigation of brick-and-mortar financial services and households’ financial health. Lawrence, KS: University of Kansas, Center on Assets, Education, & Inclusion (AEDI).

    Authors

    Friedline, Terri, Despard, Mathieu R., West, Stacia

    Financial Inclusion Report Year 2017

  17. Savings Patterns and Asset Accumulation in New Mexico’s Prosperity Kids Children’s Savings Account (CSA) Program: 2017 Update

    New Mexico’s Prosperity Kids Children’s Savings Account (CSA) program provides incentives, financial education, and peer support to encourage participants, most of whom are relatively low-income Latino families, to save for their children’s futures. Nonprofit Prosperity Works leverages social networks and community partnerships in the Albuquerque, New Mexico area to recruit accountholders. While the particular features are somewhat unique to this model, Prosperity Kids evidences the hallmarks of Children’s Savings Account policy: initial seed deposits, facilitated or universal account opening, savings incentives, and long-term asset ownership (Goldberg, 2005; Sherraden, 1991). Those who open Prosperity Kids CSAs receive a $100 initial seed deposit and up to $200 in a 1:1 match for their savings per year, over ten years.1 Parents may also earn benchmark deposits for completing activities associated with child development and academic achievement. As is the case in many CSA programs, these incentives are financed with a mix of philanthropic and public dollars. Prosperity Kids accounts are custodial, held by Prosperity Works until used for postsecondary education or, when the child turns 23, for ‘transition to a stable adulthood’, such as homeownership or entrepreneurship.

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    Authors

    Megan O'Brien, Melinda Lewis, Eui Jin Jung, William Elliott

    CSA Report Year 2017

  18. Savings Patterns and Asset Accumulation in the Promise Indiana Children’s Savings Account (CSA) Program: 2017 Update

    This study examines patterns in 529 college savings plan account opening, family contributions, and asset accumulation by participants in the Promise Indiana Children’s Savings Account (CSA) program who are enrolled from Wabash County, Indiana1. While this report uses administrative data to focus on saving, savings outcomes represent only one metric of CSA “success.” Importantly, rigorous research suggests that the positive effects of CSAs on such outcomes as educational expectations (Kim, Sherraden, Huang, & Clancy, 2015) and children’s well-being (Huang, Sherraden, Kim, & Clancy, 2014) can be realized even if families are not contributing to the account (Sherraden et al., 2015). Indeed, the Promise Indiana design incorporates research evidence that simply having a CSA can catalyze other positive outcomes for children and families, including by reinforcing children’s sense of a college-saver identity (Elliott, 2013a). Many aspects of the Promise Indiana CSA initiative are designed to cultivate these effects and, as described below, are provided to all children within a participating school, whether or not their families have opened a 529 account or, certainly, begun to contribute. Therefore, the potential value of a CSA—including those offered through Promise Indiana—should not be viewed only in terms of the dollars in the account, and saving should not be considered the only worthwhile interaction with the CSA. At the same time, contributing to a Children’s Savings Account may be one way that expectations of college are communicated to children. Additionally, saving is a potentially significant source of asset accumulation for higher education and can help to provide a sound financial foundation for a child’s future. As such, analysis such as this adds to the growing body of evidence of CSAs’ effects on children and families. Importantly, direct comparisons to these measures in other CSA programs is complicated by acute differences in target populations, program design, and the savings context. However, to contextualize these findings, a review of account opening, saving, and asset accumulation findings from the CSA field can be found in earlier AEDI reports (e.g. Lewis et al., 2016; Lewis, O’Brien, & Elliott, 2017).

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    Authors

    Megan O'Brien, Melinda Lewis, Eui Jin Jung, William Elliott

    CSA Report Year 2017

  19. "We're Going to Do This Together"

    This study explores the relationship between exposure to a community-based Children’s Savings Account program and parents’ educational expectations for their children. Generally, quantitative results suggest that parents are more likely to expect their elementary-school children to attend college if they have a 529 account. While for high-income parents, just being exposed to the Promise Indiana campaign was more closely related to parents’ expectations than actually having a 529 account, overall, exposure is correlated most strongly with parents’ educational expectations when combined with having an account. Furthermore, having an account is even more important among low-income families than exposure alone. Qualitative findings further explore parents’ experiences in Promise Indiana and suggest that most have formed college-saver identities.

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    Citation

    Rauscher, E., Elliott, W., O'Brien, M., Callahan, J., Steensma, J. (2016) “We’re Going to Do This Together”: Examining the Relationship between Parental Educational Expectations and a Community-Based Children’s Savings Account Program, Brief. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Rauscher, Emily, Elliott III, William, O'Brien, Megan, Callahan, Jason, Steensma, Joe

    Children's Savings Account Brief Year 2016

  20. Building Bridges, Removing Barriers

    Consider the following scenarios of three households that must use their varying resources to afford daily expenses and make ends meet: The Washington household's financial health is secure. When payday arrives, they use the money from their paycheck to pay bills and buy groceries. Fortunately for the Washingtons, they have direct deposit with a local bank, so the money from their paycheck is available for immediate use. Even though their bank is located just a mile away, direct deposit saves them from making an extra errand to cash their paycheck. Their account even has automatic bill pay so that their regular payments toward utility bills and auto insurance can be deducted in an easy and timely fashion. Since establishing automatic bill pay, they have never had to remember when these bills come due. They write a check to pay the rent and use their debit card to buy groceries at the store. There’s usually enough money in their account to afford the necessary day-to-day expenses; however, a bank-issued credit card can be used when money is short. When their car broke down a few months ago, the Washingtons took out a small, low-interest loan from their bank. Taking out the loan was easy since they had good credit and a longstanding relationship with their bank. With their current paycheck, they are able to make the final loan payment and save the extra money in their savings account. The Washingtons have been able to save $100 dollars each month for the last year, steadily advancing their financial health by accumulating savings in case the car ever needs another repair and investing in their future.

    Citation

    Friedline, T. (2016). Building bridges, removing barriers: The unacceptable state of households' financial health and how financial inclusion can help. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Friedline, Terri

    Financial Inclusion Report Year 2016

  21. Building Bridges, Removing Barriers - Executive Summary

    A majority of US households are struggling financially and are barely able to keep up with their day-to-day expenses let alone invest in their futures. Many struggle to pay their bills and utilities, they forego preventive medical treatment, they do not have savings to deal with financial emergencies, and they are increasingly relying on debt to make ends meet. Moreover, too many households do not have access to the basic bank or savings accounts that they so desperately need to manage their financial lives. Building Bridges, Removing Barriers proposes that financial inclusion—access to basic bank or savings accounts—can operate as a “bridge” to households’ financial health. A bridge is an infrastructural solution that offers safe passage over rough terrain and a connection to new opportunities. For households stranded on islands of financial struggles, a bridge may be a welcomed passageway to secure ground. Households may be able to afford their day-to-day expenses like rent and utility bills and save for financial emergences like an unexpected job loss or major car or home repair. Once on secure ground, households can advance on their journey more easily. They have enough money saved to recover from financial emergencies, keep their debt at manageable levels, and begin to invest in the future by saving for retirement. From this perspective, financial inclusion by having access to basic bank or savings accounts can have the dual effects of stabilizing or securing households’ financial health and advancing or mobilizing it.

    Citation

    Friedline, T. (2016). Building bridges, removing barriers: The unacceptable state of households' financial health and how financial inclusion can help. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Friedline, Terri

    Financial Inclusion Executive Summary Year 2016

  22. How student debt is helping to increase the wealth gap and reduce the return on a degree

    In a time when wealth inequality increasingly threatens the U.S.—our sense of fairness and possibility, the fabric of our shared democracy, and the institutions that are supposed to undergird our economic opportunities--and when these anxieties are voiced particularly acutely by students who contemplate their own futures and question the ability of higher education to act as an equalizer in society, the discussion around student debt has grown stale. These conversations, usually consisting of the same few voices, echo with researchers investigating questions that all too often seek to maintain the status quo rather than challenge it and that seem, to a public plagued with disillusionment that borders on panic, divorced from their lived experiences. Within these confines, proposed solutions tend to mostly comprise tweaks around the margins (e.g., income-based repayment modification), rather than fundamental reconsiderations of how to finance higher education in a way that will simultaneously strengthen the return on a degree, improve educational outcomes such as attainment, and reduce wealth inequality. In this brief, I seek to provide a fresh look at what America gets from student loans. This begins with shifting the conversation from talking about whether or not college pays off for students who have to borrow to shining a bright light on the equity of having to pay for college with student loans. I do this by bringing together bodies of evidence that reveal: (a) the amount of wealth your family has matters for whether you will attend and complete college, (b) low-income and minority students receive less of a return on a degree than their wealthier, white counterparts, and (c) college goers—including those who graduate—with debt have less wealth than their peers without debt. This not only has implications for borrowers but for their children who grow up with less wealth and who will then be less able to use education to climb the economic ladder themselves. Given this, I conclude that a financial aid system for the 21st Century must not only help students pay for college but also help them build assets. Children’s Savings Accounts (CSAs) work on many fronts, from early preparation to college access to completion and then post-college financial outcomes, to address concerns about the differential return on a degree and wealth inequality. However, in order to make CSAs a true tool for fighting wealth inequality, they must be combined with a significant wealth transfer. Possibilities for this wealth transfer might include such approaches as augmenting existing scholarship or grant programs, such as the Pell Grant program, with opportunities for early-commitment asset building or diverting funds now going to poorly-targeted tax subsidies. It has been estimated that CSAs with a wealth transfer could reduce the racial wealth gap in America by 20% to 80%, depending on participation and the size of the investment in these accounts. This pivot to asset-based financial aid could be the centerpiece of a new economic mobility system that makes good on the promise made to American children, that through their own effort and ability in school they can achieve the American Dream.

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    Authors

    Elliott III, William

    Children's Savings Account Brief Year 2016

  23. Initial Elementary Education Finding From Promise Indiana's Children's Savings Account Program

    The study conducts an initial examination of school data and their associations with participation and saving in the Promise Indiana Children’s Savings Account (CSA) program. Data on savings were obtained from the onset of the program through February 2016 from Promise Indiana via the Indiana CollegeChoice 529 plan manager (Ascensus College Savings) and merged with administrative data on student outcomes for the 2014- 2015 school year. The primary research questions guiding this analysis is whether or not simply having a CSA, being a saver, or the amount saved is associated with lower absenteeism and/or higher reading and math scores. Given the importance of family income to both savings behaviors and academic achievement, we looked at these questions for the sample of students overall, and, separately, for the sample of low-income students (defined as free/reduced lunch participants). In this study, there is no evidence to suggest that having a CSA, being a saver (i.e., having at least one family or champion contribution), or the amount deposited are related to children’s absences. However, among the subsample receiving free/reduced lunch, having a CSA is positively associated with both children’s reading and math scores; however, this association is not found in the aggregate sample. In contrast, amount contributed has a positive association with the aggregate sample’s math and reading scores but not with the scores of children receiving free/reduced lunch. Further, being a saver is associated with reading scores for both the aggregate and free/reduced lunch samples. While more research is needed before policy conclusions can be drawn, these findings suggest that CSA programs may complement schools’ academic objectives.

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    Citation

    Elliott, W., Kite, B., O'Brien, M., Lewis, M., and Palmer, A. (2016) Initial Elementary Education Finding From Promise Indiana's Children's Savings Account Program. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Elliott III, William, Kite, Benjamin, O'Brien, Megan, Lewis, Melinda, Palmer, Ashley

    Children's Savings Account Working Paper Year 2016

  24. Latino Immigrant Families Saving in Children's Savings Account Program against Great Odds - Executive Summary

    This study uses administrative records from New Mexico’s Prosperity Kids Children’s Savings Account (CSA) program and in-depth interviews with a sample of participating parents and children to examine savings outcomes and experiences for these low-income Latino families. At this point in the CSA’s evolution, 29% of Prosperity Kids accounts have seen deposits from families’ saving. As of December 2015, among families who contributed in addition to match or incentives, 54% have saved more than $100 in their account. The median total account value for these families was $345 at the end of 2015 (mean, $394). The median amount of family deposits is $123 (mean, $155), with median match deposits of $124 (mean, $139). Average monthly contributions are $12 (ranging from <$1 to $220). Average quarterly contributions were $31.

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    Citation

    Lewis, M., O'Brien, M., Elliott, W., Harrington, K., Crawford, M. (2016) Immigrant Latina Families Saving in Children’s Savings Account Program against Great Odds: The Case of Prosperity Kids - Executive Summary. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Lewis, Melinda, O'Brien, Megan, Jung, Euijin, Harrington, Kelly, Jones-Layman, Amanda

    Children's Savings Account Executive Summary Year 2016

  25. Latino Immigrant Families Saving in Children's Savings Account Program against Great Odds: Prosperity Kids

    This study uses administrative records from New Mexico’s Prosperity Kids Children’s Savings Account (CSA) program and in-depth interviews with a sample of participating parents and children to examine savings outcomes and experiences for these low-income Latino families. At this point in the CSA’s evolution, 29% of Prosperity Kids accounts have seen deposits from families’ saving. As of December 2015, among families who contributed in addition to match or incentives, 54% have saved more than $100 in their account. The median total account value for these families was $345 at the end of 2015 (mean, $394). The median amount of family deposits is $123 (mean, $155), with median match deposits of $124 (mean, $139). Average monthly contributions are $12 (ranging from <$1 to $220). Average quarterly contributions were $31.

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    Citation

    Lewis, M., O'Brien, M., Elliott, W., Harrington, K., Crawford, M. (2016) Immigrant Latina Families Saving in Children’s Savings Account Program against Great Odds: The Case of Prosperity Kids. Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.

    Authors

    Lewis, Melinda, O'Brien, Megan, Harrington, Kelly, Crawford, Mac

    Children's Savings Account Working Paper Year 2016

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