CSAs for Low-Income Families Jump-Start Savings for College

By Abdul-Alim, Jamaal | The Hispanic Outlook in Higher Education, May 19, 2014 | Go to article overview

CSAs for Low-Income Families Jump-Start Savings for College


Abdul-Alim, Jamaal, The Hispanic Outlook in Higher Education


Higher education could become more attainable for lowincome families in Albuquerque, N.M., thanks to a new initiative that is part of a national trend of programs designed to help the families put away money for college.

Through a pilot phase of the initiative, about 220 children in zip code 87105 - one of the poorest areas in Albuquerque - will be given an initial $150 to $200 for Children's Savings Accounts, or CSAs.

Up to $200 will be matched annually until the children reach college age, and caretakers and students may also be able to earn $100 per year in incentive payments for meeting certain goals, such as good school attendance, according to a description of the program provided by Prosperity Works, an asset-building organization that is overseeing the program.

If all goes as planned, the children of participating families will have between $6,000 and $10,000 saved for college by the time they graduate from high school, program officials say.

"We believe this initial investment could help families thinking about putting a little bit, whatever we can afford, to start planning for our children's education," said Adrián Pedroza, executive director at the Partnership for Community Action, one of several agencies that are helping Prosperity Works implement the program, known as Collective Impact.

Collective Impact is part of a growing national trend of programs designed to provide families of lesser economic means with a mechanism to help finance their children's higher education.

For instance, the San Francisco mayor's office runs the Kindergarten to College Program, which makes college savings accounts seeded with $50 available to every kindergartner in the San Francisco school district. And in recent years, Congress has considered the America Saving for Personal Investment, Retirement, and Education Act, or the ASPIRE Act, which would essentially make CSAs universal for every newborn in the United States.

Some experts say CSAs will help low-income families realize their higher education dreams - and that the reasons transcend the amount of financial resources at a family's disposal.

"I think it goes beyond the money," said Deborah A. Santiago, chief operating officer and director of research at Excelencia in Education, a Washington, D.C.-based research and policy organization that seeks to make college more accessible to Latino students.

"The ability to have college savings is good, but it's what it signifies for the family - that college is a possibility and that they have a role to play in supporting it," Santiago said of CSAs. "And I think if they're investing, even if it's small amounts of money, it permeates what they need to do to support it so that early investment does send a monetary but powerful message that they will support their child going to college.

"The earlier it starts the more powerful it is," she said.

Benjamin H. Harris, policy director, The Hamilton Project, a Brookings Institution initiative that seeks evidence based approaches to public investments, said while CSAs sound good in theory, there is little evidence that CSAs make a difference.

"You look at the research and what tends to happen is if you offer someone an account and offer someone free money, they tend to take it but they don't end up taking advantage of the match," Harris said, explaining that CSAs don't really encourage families to save more for college.

As an example, he cited a recent Journal of Policy Analysis and Management paper titled "Do Child Development Accounts Promote Account Holding, Saving, and Asset Accumulation for Children's Future? Evidence from a Statewide Randomized Experiment." That study found that the difference between families that were offered a $1,000 college savings account and those who were not was $1,040 - suggesting that families had only put away an extra $40 as a result of the accounts.

"Are they a good way to save more money? …

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