Children’s Savings Accounts

(Community Matters) a note from my very dear friend Reid Cramer of the New America Foundation:

I’m writing with some exciting news. Yesterday, the Department of Education (ED) announced plans to test the impact of college savings accounts on low-income children through the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP).

The College Savings Account Research Demonstration Project will direct at least $8.7 million dollars into savings accounts for 10,000 high school students across the country. Participating students will receive a seed deposit and be eligible to have their savings matched, in addition to receiving other support services to promote college success. Importantly, the project will deploy a rigorous, randomized control design that will help isolate the impacts of the accounts on educational outcomes. This is a large-scale effort, with the potential to engage many people, organizations, and policymakers.

Yesterday we hosted an event where Under Secretary of Education Martha Kanter and Congressman Chaka Fattah, the legislative architect of GEAR UP, described the effort and its potential impact in helping the country meet its ambitious college completion goals by 2020. We were pleased that Willie Elliott III, Assistant Professor at the University of Kansas and Senior Research Fellow in the Asset Building Program, was able to participate in the panel discussion. His series of reports, Creating a Financial Stake in College, which was published in January in partnership with the Center for Social Development, played an integral role in focusing the attention of policymakers at ED on the potential of children’s savings to increase college readiness, access, and degree completion. If you are interested in hearing the remarks and subsequent panel discussion, you can view the event video here.

However, there is still work to be done. ED has asked for public comments on their proposed demonstration. They are looking for ways to sharpen the proposal and have set a deadline of June 30th. We encourage those of you with thoughts and experience in this field to participate actively in improving the program. I’d also like to see a vigorous competition among eligible states for these funds. Those of you that have connections with state education agencies and GEAR UP programs should work to make them aware of this opportunity.

Finally, I’m pleased to be releasing today a new paper by Terri Friedline.  The Case for Extending Financial Inclusion to Children examines the role of parents’ financial resources on access to savings products and savings behavior. The paper also explores a set of national policy opportunities to provide children from all economic backgrounds a strong financial foundation. Terri is a newly minted Ph.D. from the University of Pittsburgh and research fellow with our program. This fall she is joining Professor Elliott on the faculty of the School of Social Work at the University of Kansas. As always, we welcome your feedback on her paper.

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