Save a Little, Gain a Lot: Cultivating College-Saver Identities

There’s not a lot of good news about college financing today. Headlines bemoan rising tuition costs. Polls find that paying for college is parents’ greatest financial concern and that more than 70 percent of college students are worried about money. Student debt is a hot topic in state legislatures and backyard barbeques alike. There is a growing sense that the American Dream of upward mobility through advanced education may be slipping beyond the grasp of many.

Against this bleak backdrop, the growing evidence base surrounding Children’s Savings Accounts (CSAs) stands in stark relief. Distinct from the financial products—usually state-supported 529 college saving plans or traditional deposit accounts—through which they are delivered, CSAs provide dedicated savings accounts, usually beginning at birth or kindergarten, and progressive incentives, including initial deposits and savings matches, often accompanied by financial education and activities to cultivate and sustain college expectations. In a variety of studies, CSAs show promise to change the landscape of education financing, turning financial aid into the potent catalyst of improved outcomes and equitable opportunity the country needs and students deserve.

Even small savings can mean big results

Encouraged by findings that suggest that dedicated education savings in amounts as little as $500 can make a child three times more likely to enroll and four times more likely to graduate from college, and eager for new approaches, educators, philanthropists and policymakers are implementing CSAs within school districts, community-based initiatives and state policy. In recent years, CSA programs, using different incentive structures, engagement strategies and delivery systems have proliferated. Programs are now operating from Maine (Harold Alfond College Challenge) to San Francisco (Kindergarten-to-College) and in communities as diverse as Latino immigrants in New Mexico (Prosperity Kids) and newborns in Connecticut (CHET Baby Scholars).

While these CSAs—and the children in them—are too young to yet determine conclusive effects on postsecondary educational outcomes, they show tremendous potential for realizing interim benchmarks independently associated with educational attainment and financial well-being. Rigorous, randomized-control trial research in the SEED for Oklahoma’s Kids (SEED OK) CSA has found significant effects on the social and emotional health of young children, as well as maternal educational expectations and mental health. Investigations of Promise Indiana, which facilitates enrollment in state 529 college savings plans and also intervenes to foster college-bound identities and engage families in college saving, reveal evidence of college-saver identity development among children and parents as well as greater educational expectations and substantial savings outcomes.

Cultivating college saver identities

While few American households own 529s, CSAs bridge access to these rather complex products; today, more than 70 percent of children in Promise Indiana counties have 529s, SEED OK universally enrolls an entire population and all children in Maine receive an account with $500 automatically at birth. CSA models can coalesce entire communities around the collective challenge of college saving. In Promise Indiana, champions support students’ educational aspirations and make financial contributions that range from $5.29 deposits from individuals to a recent $430,000 commitment from the Community Foundation of Wabash County to award scholarships early—rather than at the point of high school graduation—as incentives for college planning, saving and academic preparation.

Across the country, low-income families in CSAs are demonstrating that they can—and will—save for college, even if they can save relatively small amounts. CSA design can account for the constraints they face, equalizing outcomes and commensurately rewarding their efforts.

CSA momentum continues to build, fueled by a strengthening evidence base. CSAs are not only—or even primarily—about accumulating the resources to pay for tuition and fees. They have the potential to reshape college financing, away from debt dependence and toward asset empowerment. And, in the process, Children’s Savings Accounts can transform educational trajectories, particularly for disadvantaged children and their families, and reclaim the American Dream as a real promise, the way we want it to be.

Kansas and Missouri both have college savings options for families. To inquire about setting up a 529 college savings account in the states of Kansas and Missouri, please contact:

  • The State of Kansas Learning Quest Plan: Call 1-800-579-2203 weekdays, 8 am – 5 pm, CT
  • The State of Missouri MOST Plan: Call 888-414-6678 weekdays, 7 am – 8 pm, CT.
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Melinda Lewis

Melinda Lewis, LMSW, received her Master of Social Work degree from Washington University in St. Louis, MO. She worked as a nonprofit policy advocate, grassroots organizer, and community researcher for several years and is now an Associate Professor of Practice in the School of Social Welfare, teaching social policy and community practice courses at the University of Kansas.