Center on Assets, Education, and Inclusion

Children’s Savings Accounts (CSAs) are interventions that seek to build assets for children to use as long-term investments (Goldberg, 2005; Sherraden, 1991), particularly for postsecondary education. Provided through financial institutions, CSAs generally include progressive features, such as initial seed deposits, financial incentives for attaining certain academic benchmarks, or matches for savings deposits (e.g., Elliott & Lewis, 2014). Distinct among financial aid policies for their cultivation of improved outcomes throughout children’s lives, CSAs aim to equip children, particularly those who are disadvantaged, with assets that have demonstrated associations with academic achievement (Elliott, Kite, O’Brien, Lewis, & Palmer, 2016) and educational attainment (Elliott, 2013; Elliott & Beverly, 2011). CSAs also connect households to mainstream financial institutions (Friedline, 2014), activating families to save for their children’s futures and their later financial well-being.

Children’s Savings Accounts (CSAs) are interventions that seek to build assets for children to use as longterm investments (Goldberg, 2005; Sherraden, 1991), particularly for postsecondary education. Provided through financial institutions, CSAs generally include progressive features, such as initial seed deposits, financial incentives for attaining certain academic benchmarks, or matches for savings deposits (e.g., Elliott & Lewis, 2014). Distinct among financial aid policies for their cultivation of improved outcomes throughout children’s lives, CSAs aim to equip children, particularly those who are disadvantaged, with assets that have demonstrated associations with academic achievement (Elliott, Kite, O’Brien, Lewis, & Palmer, 2016) and educational attainment (Elliott, 2013; Elliott & Beverly, 2011). CSAs also connect households to mainstream financial institutions (Friedline, 2014), activating families to save for their children’s futures and their later financial well-being.

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.

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.

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.

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.

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).