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Children's savings accounts

Health Factors: Education Income
Decision Makers: Community Members Local Government State Government Federal Government Grantmakers Nonprofit Leaders
Evidence Rating: Expert Opinion
Population Reach: 10-19% of WI's population
Impact on Disparities: Likely to decrease disparities

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Description

Children’s savings accounts (CSAs), also called children’s development accounts (CDAs), are accounts designated for a specific child and intended to build long-term assets. Accounts may be started at birth or when a child is young and are built over time with contributions from family, friends, or the child. The initial contribution, or seed money, may come from government or non-profit programs, and these agencies may match contributions or provide other savings incentives over time. Account enrollment is often accompanied by age-appropriate financial education for the family and child (CFED-Childrens savings accounts).

Expected Beneficial Outcomes

Increased asset accumulation
Increased college enrollment
Increased graduation rates
Increased financial resources for higher education
Improved social emotional skills
Improved parental mental health
Improved financial literacy

Evidence of Effectiveness

Children’s savings accounts (CSAs) are a suggested strategy to expand educational and financial opportunity for children from low income families or disadvantaged backgrounds (CFED-Childrens savings accounts). Family assets and children’s savings appear to increase college attendance and completion (Elliott 2013a, Elliott 2013b, Elliott 2013c, Friedline 2013a, CSD-Elliott 2012, Elliott 2011, Zhan 2011, Huang 2010); however, additional evidence is needed to determine the effects of CSAs specifically.

Children with college savings may have greater college expectations (CFED-Factfile 2014) and be more likely to graduate from college than those without savings, particularly among low- to moderate-income and black children (Elliott 2013b). Children and young adults with savings accounts, particularly accounts designated for schooling, are more likely to enroll and graduate from college than those without such accounts (CSD-Elliott 2012). Even small school savings accounts (less than $500) may increase college enrollment and graduation among low and moderate income children compared to peers without savings (Elliott 2013c), particularly among black children (Friedline 2013a).

Holding savings accounts in adolescence, particularly among lower income youth, appears to be associated with an increased likelihood of savings account ownership, greater total savings (Friedline 2013, Friedline 2013b, Friedline 2012), and greater asset accumulation for young adults (Friedline 2013, Friedline 2013b). Greater parental assets are associated with increased educational attainment (Zhan 2011); parental assets may increase college attendance and help pay for college (Huang 2010). College-designated savings accounts may decrease the likelihood of students taking out high dollar student loans (CSD-Elliott 2013).

Participation in a CSA intervention may improve social emotional development in early childhood (Huang 2014, CFED-Factfile 2014), and may positively affect mothers’ mental health (Huang 2014a). CSA interventions such as SEED for Oklahoma Kids may also increase parents’ financial literacy and their likelihood of opening 529 College Savings Plans (Huang 2010).

CSAs may overcome some barriers to savings, however, limited income flow, debt, and emergencies often remain challenges (Sherraden 2013).

Implementation

United States

The US Department of Education’s children’s development account policy is rapidly evolving (AEI-KU 2013). As of 2012 there were 13 national sites for the community-based matched savings program Saving for Education, Entrepreneurship, and Down-payment (SEED) (CFS 2012). A number of other programs have been piloted, including I Can Save in Youngstown, Ohio and Nebraska’s Opportunity Passport (Sherraden 2013).

Some US schools offer financial inclusion programs that combine financial education with savings account programs. These programs can include matched savings efforts similar to CSAs (CFS 2012).

In other industrialized countries, CSAs focus on low income or disadvantaged children explicitly. Programs typically provide seed money for accounts and matching funds for further deposits, and have requirements for school attendance and high school graduation (Cheung 2012a).

Implementation Resources

AEI-KU 2013 - Assets & Education Initiative (AEI). Building expectation, delivering results: Asset-based financial aid and the future of higher education. Lawrence: The Assets and Education Initiative, University of Kansas School of Social Welfare; 2013. Accessed on March 3, 2016
CFED-Childrens savings accounts - Corporation for Enterprise Development (CFED). Children's saving accounts (CSAs). Accessed on February 16, 2016

Citations - Description

CFED-Childrens savings accounts - Corporation for Enterprise Development (CFED). Children's saving accounts (CSAs). Accessed on February 16, 2016

Citations - Evidence

CFED-Childrens savings accounts - Corporation for Enterprise Development (CFED). Children's saving accounts (CSAs). Accessed on February 16, 2016
CFED-Factfile 2014 - Corporation for Enterprise Development (CFED). Fact file: Scholarly research on children's saving accounts. 2014. Accessed on February 16, 2016
CSD-Elliott 2012 - Elliott W. We save, we go to college. Washington, DC: New America Foundation; St. Louis: Center for Social Development (CSD), George Warren Brown School of Social Work, Washington University; 2012. Accessed on February 16, 2016
CSD-Elliott 2013 - Elliott W, Nam I. Reducing student loan debt through parents' college savings. St. Louis: Center for Social Development (CSD), George Warren Brown School of Social Work, Washington University; 2013. Working paper 13-07. Accessed on February 16, 2016
Elliott 2011* - Elliott W, Destin M, Friedline T. Taking stock of ten years of research on the relationship between assets and children's educational outcomes: Implications for theory, policy and intervention. Children and Youth Services Review. 2011;33(11):2312-2328. Accessed on February 16, 2016
Elliott 2013a* - Elliott W, Constance-Huggins M, Song HA. Improving college progress among low- to moderate-income (LMI) young adults: The role of assets. Journal of Family and Economic Issues. 2013;34(4):382-399. Accessed on February 16, 2016
Elliott 2013b* - Elliott W, Song H, Nam I. Small-dollar accounts, children's college outcomes, and wilt. Children and Youth Services Review. 2013;35(3):535-547. Accessed on February 16, 2016
Elliott 2013c* - Elliott W, Song H, Nam I. Small-dollar children's saving accounts and children's college outcomes by income level. Children and Youth Services Review. 2013;35(3):548-559. Accessed on February 16, 2016
Friedline 2012* - Friedline T, Elliott W, Chowa GAN. Testing an asset-building approach for young people: Early access to savings predicts later savings. Economics of Education Review. 2012;33:31-51. Accessed on February 16, 2016
Friedline 2013* - Friedline T, Elliott W. Connections with banking institutions and diverse asset portfolios in young adulthood: Children as potential future investors. Children and Youth Services Review. 2013;35(6):994-1006. Accessed on February 16, 2016
Friedline 2013a* - Friedline T, Elliott W, Nam I. Small-dollar children's saving accounts and children's college outcomes by race. Children and Youth Services Review. 2013;35(3):548-559. Accessed on February 16, 2016
Friedline 2013b* - Friedline T, Song HA. Accumulating assets, debts in young adulthood: Children as potential future investors. Children and Youth Services Review. 2013;35(9):1486-1502. Accessed on February 16, 2016
Huang 2010* - Huang J, Guo B, Kim Y, Sherraden M. (2010). Parental income, assets, borrowing constraints and children's post-secondary education. Children and Youth Services Review. 2010;32(4):585-594. Accessed on February 16, 2016
Huang 2014* - Huang J, Sherraden M, Kim Y, Clancy M. Effects of Child Development Accounts on early social-emotional development: An experimental test. JAMA Pediatrics. 2014;168(3):265-271. Accessed on February 16, 2016
Huang 2014a* - Huang J, Sherraden M, Purnell JQ. Impacts of Child Development Accounts on maternal depressive symptoms: Evidence from a randomized statewide policy experiment. Social Science and Medicine. 2014;112:30-38. Accessed on February 16, 2016
Sherraden 2013* - Sherraden M, Peters C, Wagner K, Guo B, Clancy M. Contributions of qualitative research to understanding savings for children and youth. Economics of Education Review. 2013;32(1):66-77. Accessed on February 16, 2016
Zhan 2011* - Zhan M, Sherraden M. Assets and liabilities, educational expectations, and children's college degree attainment. Children and Youth Services Review. 2011;33(6):846-854. Accessed on February 16, 2016

Citations - Implementation

CFS 2012 - Center for Financial Security (CFS). Youth financial inclusion: Complementing financial education with account access. Madison: University of Wisconsin- Madison; 2012. Research Brief 2012-5.1. Accessed on February 16, 2016
Cheung 2012a* - Cheung M, Delavega E. Child savings accounts: Learning from poverty reduction policies in the world. International Social Work. 2012;55(1):71-94. Accessed on February 16, 2016
Sherraden 2013* - Sherraden M, Peters C, Wagner K, Guo B, Clancy M. Contributions of qualitative research to understanding savings for children and youth. Economics of Education Review. 2013;32(1):66-77. Accessed on February 16, 2016

Page Last Updated

April 28, 2015

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