Center on Assets, Education, and Inclusion

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  1. Redesigning College Savings (529) Plans to Achieve Inclusive Child Development Accounts

    Child Development Accounts (CDAs)—also called Child Savings Accounts (CSAs)—provide assets and encourage saving and asset building for children. (See the accompanying document, The Case for a Nationwide Child Development Account Policy.) An efficient, trusted, and sustainable system for delivering CDAs is already being implemented in some states. A nationwide policy would require federal funding and changes in policy and practice to deliver CDAs for all children with a seed deposit as early as birth.

    Research shows that CDAs have positive effects on asset building and healthy child and family development, with greater effects for people of color and low-income households. Asset building over time is the key to these results. Positive effects for children and families occur even before the money is spent for education.

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    Authors

    José Cisneros, Margaret M. Clancy, William Elliott III, Amanda Feinstein, Martha Kanter, Muneer Karcher-Ramos, Clint Kugler, Julie Peachey, Colleen Quint, Thomas M. Shapiro, Michael Sherraden

    Brief Year 2021

  2. The Case for a Nationwide Child Development Account Policy

    Investing in children is fundamental for families, communities, and the U.S. economy. Child Development Accounts (CDAs), also called Children’s Savings Accounts (CSAs), offer a proven and efficient model for investing in all children.

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    Authors

    José Cisneros, Margaret M. Clancy, William Elliott III, Amanda Feinstein, Martha Kanter, Muneer Karcher-Ramos, Clint Kugler, Julie Peachey, Colleen Quint, Thomas M. Shapiro, Michael Sherraden

    Brief Year 2021

  3. Poverty and performance on standardized tests in Rhode Island and Massachusetts: Implications for policy reform

    Improving educational outcomes for Rhode Island’s K-12 students is essential for the future of the state. While not an end in themselves, standardized tests can be used to measure school and statewide progress and guide accountability efforts. While extensive research has examined how student, family, school, and community factors influence test performance, one factor sticks out: student poverty (Reardon (2011;) (Carnoy & Garcia, 2017;) (Ford, 2011, (Kornrich & Furstenberg (2013;) (Duncan & Murnane, 2011). Because poverty is so closely related to performance, the failure to account for poverty can lead to misleading assessments of school performance, distorting policy efforts.

    However, the relationship between poverty and school performance in Rhode Island, and how this should guide policy, is not well understood. Rhode Island currently uses standardized test data to comply with national reporting, benchmark performance, and identify opportunities for improvement. Expecting a fixed level of academic achievement for a certain amount of educational investment per student neglects the substantial variation in student experience and competency due to unequal family resources. A more nuanced understanding of the relationship between poverty and education would help to isolate schools that are performing well, and poorly, relative to their students’ poverty rate. Understanding the performance of Rhode Island relative to Massachusetts, a wealthy state and national leader in education reform, can help to elucidate the role of poverty in driving achievement gaps.

    In this context, we used data on student poverty and 2018-2019 standardized test performance for elementary, middle, and high school students in Rhode Island and Massachusetts to examine the relationship between school district-level poverty and performance.

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    Authors

    Timothy P. Ryan, PhD, Emily Rauscher, PhD, Fredrick Schockaert, EdD

    Working Paper Year 2020

  4. Reimagining College Promise Programs: A Wealth Perspective

    Education is one of the largest investments America makes in reducing poverty and promoting economic mobility. From this perspective, education is perceived by many as a long-term strategy for achieving individual, family, and intergenerational prosperity; a tool for increasing overall productivity; and an engine of economic growth on which our collective fortunes depend. However, like poverty policies in America, education policies have largely focused on providing children with enough financial aid to survive, not enough to thrive. This brief will argue that to deliver on the promise of money, we posit that a better notion of free is to provide low-income and underserved students with targeted ongoing deposits into a Children’s Savings Account from an early age. Further, we should consider integrating this long-term strategy with a long-term education investment, like College Promise (frequently referred to as “free college”) programs, to reverse this damaging trend, build a college going culture within families and their communities, and remove economic barriers to higher education and adult success.

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    Authors

    William Elliott, Sophia Nielsen

    Brief Year 2020

  5. Opportunity Investment Accounts: A Proposal for an Integrated Asset Building Mechanism for Youth in Foster Care

    We should not lose sight of moments in our collective history when we, as a country, have dared to dream and, as a result, were able to leap forward. The race to the moon was just such a moment, when we were “pushed” by the Soviet Union’s early advantage in the “space race” to unshackle ourselves from our limited imagination and as a result developed new technology to explore space. The U.S. foster care system needs a similar push to move away from an exclusive focus on survival policies for foster care youth and move toward including an asset-empowered agenda that can provide youth in foster care with the opportunity to thrive. This report looks at adapting CSAs to work better for Foster Care Youth.

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    Authors

    William Elliott, Gina Chowa

    Brief Year 2019

  6. The Impact of Grocery Store Rewards Cards

    This study conducted two cluster randomized trials using household-level random assignment to test the impact of a rewards cards program at two different locations: Wabash County Indiana and the City of St. Louis. Findings show the treatment group in Indiana had a greater than three-fold increase in savings activity in CSAs, and in St Louis had a greater than seven-fold increase in savings activity in CSAs. These findings suggest that rewards cards can be an effective strategy for engaging families of different backgrounds in saving activities. 

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    Authors

    William Elliott, Nicholas Sorensen, Megan O’Brien, Zibei Chen, Briana Starks, Haotian Zhen

    Working Paper Year 2019

  7. 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

  8. 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

  9. January 2018 Newsletter

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    Authors

    AEDI

    Newsletter Year 2018

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

  20. Participation and Savings Patterns in the Wabash County Promise Scholarship Program: Year 1

    This report examines enrollment, savings behaviors, and asset accumulation in the Wabash County Promise Scholarships program, which deposits early-commitment scholarship awards into children’s college savings accounts, in an effort to improve educational outcomes. The rationale for the Wabash County Promise Scholarships is rooted in research evidence examining the potential of early accumulation of educational assets to cultivate identities as college savers and increase educational expectations. This evidence has contributed to a growing trend among scholarship providers to consider ways to deliver awards early enough in students’ educational trajectories to influence not just the affordability of postsecondary education, but also students’ likelihood of enrolling in college and completing postsecondary credentials. One particular iteration of these efforts is the melding of ‘Promise’ programs or other early-commitment scholarships with Children’s Savings Account (CSA) programs that help families accumulate educational assets through incentivizing their own saving and amplifying families’ contributions with programmatic features (Elliott & Levere, 2017). Early-commitment scholarships provide early notification, guarantee, and/or delivery of financial aid to help offset the costs of postsecondary studies or training. The Wabash County Promise Scholarships program is an example of early-commitment financial aid that leverages the potential of both approaches.

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    Authors

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

    Report Year 2017

  21. 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

  22. 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

  23. 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

  24. 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

  25. 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

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