CSAs: A Strategy for Early Awareness

October 26, 2015

By Teresa Stock Steinkamp, LMSW, Advising Director
The Scholarship Foundation of St. Louis

As practitioners in college access, we are challenged to provide opportunity and support to low-income, first-generation students and their families in the pursuit of a postsecondary education. Increasingly, early awareness strategies are a critical part of this process. On October 8, the Federal Reserve Bank of St. Louis hosted the conference 529s and Child Savings Accounts: New Strategies to Promote Savings and Development for America’s Children. For those unfamiliar, Child Savings Accounts (CSAs) are long-term accounts designed to build assets. Seeded with an initial deposit, built with additional contributions, savings matches, and other incentives, these accounts continue to grow over the course of a child’s lifetime. These savings can then be used to purchase an asset, such as higher education.  

Why should the college access community care about CSAs? Research by William Elliott at The University of Kansas Center on Assets, Education, and Inclusion provides evidence that CSA programs promote a “college-saver identity”; identifying as a college-saver means a student is three times more likely to enroll in college . Furthermore, for low- and moderate-income children with school designated savings, college-saver identities are associated with a threefold increase in college graduation . The knowledge that college is possible and that someone believes in their potential to pursue postsecondary education is powerful in the lives of young people. Increasingly, college access organizations are investing in CSAs as a way to send early signals to students. 

Building a strong CSA program should be carefully planned. Throughout the conference, several elements were mentioned that are critical for successful programs:

  • Automatic: Open accounts automatically, as a seamless function of programming. 
  • Opt-Out vs. Opt-In: Require families to opt-out of participating, as opposed to opt-in. 
  • In-person Deposits: Provide, when possible, the ability for families to make in-person deposits.
  • No Minimum Deposit: Encourage savings by allowing small deposits. Minimum deposits may prevent a low-income family from saving; the ability to make $5-$10 deposits increases the likelihood a family can make a contribution.
  • Opportunities for Earning Additional Deposits or Matches: Offer age-appropriate incentives that promote both savings and non-savings goals. For example, provide opportunities for students to earn deposits in the future through completion of specific tasks and/or reaching a particular benchmark (e.g., completing the FAFSA, taking ACT/SAT, passing Algebra I, or meeting an attendance requirement). Furthermore, savings goals also provide an opportunity for 1:1 matching funds.

Although not a silver bullet, CSAs have the potential to provide real, tangible hope for young people. They create a college saving identity and, as a result, a college success identity. The savings themselves, along with the non-savings goals, create strategies for success. The Scholarship Foundation is in its second year of offering Future Forward, a CSA through MOST: Missouri’s 529 College Savings Plan.  Future Forward funds accounts for eighth graders and offers future deposits for meeting benchmarks in high school and also matches family savings.

In his opening remarks at the Federal Reserve Bank of St. Louis, Rev. Starsky Wilson (CEO of the Deaconess Foundation and Co-Chair of the Ferguson Commission) encouraged participants to keep children at the center of all policy decisions—as organizations, as well as local, state, and national governments. From a policy perspective, CSAs and other asset-building accounts provide an opportunity for economic mobility. Advocates for low-income and vulnerable youth appreciate evidence-based tools for encouraging students to persist in school.  Corporation for Economic Development (CFED) provides a few key recommendations for policies at the federal level that would encourage the development of Children’s Savings Accounts among economically vulnerable populations:

  • Focus on removing barriers that prevent a widespread CSA program;
  • Create a universal CSA program;
  • Include college savings in the Saver’s Credit;
  • Make education savings accounts exempt from federal benefits asset limits and student aid calculators; and,
  • Incorporate CSAs into existing federal programs.  

Strong college access work directly supports students and advocates for policies that improve access and persistence opportunities. Postsecondary education is a catalyst for change in individual lives and in communities; CSAs are an additional tool in our toolkit to provide hope, foster opportunity, spark change, and create a world where all children can pursue higher education regardless of economic circumstance.

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