CSAs – A Fiscally and Socially Responsible Strategy That Works
Guest blog written by: Clint Kugler, Promise Indiana
Ask Alexis, a 7 year old first grader in Wabash County, what she wants to become when she grows up and she will tell you an “eye doctor.” Alexis is not the daughter of a doctor, but rather one of five kids in a low income, single-parent household. The tremendous pressures families face today make it difficult to prepare for their children’s futures. Fortunately, communities are harnessing the power of asset building and employing children’s savings accounts (CSAs) as a fiscally and socially responsible strategy. With community support, CSAs can help kids around our state and nation—kids like Alexis—pursue their dreams.
Promise Indiana, currently operating in eight Indiana counties, is a community-driven CSA program that helps youth increase hope and build the assets they need to pursue education beyond high school. Students with a dedicated college savings account in their name are three times more likely to attend college and four times more likely to complete college.[i] Account ownership helps youth build “college saver identity.”[ii] These findings and other asset research have significant implications for educational attainment, workforce development, and community well-being.
Currently, 11.7% of youth in Indiana have a 529 college savings account, and that rate varies widely by county. Only eight counties have a savings rate of 15% or higher of youth under 18 with a 529 account. Almost half our counties have a savings rate of 6% or fewer youth with 529 accounts.
Prosperity Now recently released its 2016 Assets & Opportunity Scorecard. The Scorecard identifies a barrier which affects the rates at which Hoosier families build assets: asset limits on public assistance programs like SNAP and TANF. “Personal savings and assets are precisely the kinds of resources that allow people to move off public benefit programs. The existence of asset limits can discourage families considering or receiving public benefits from saving for the future.”[iii] Prosperity Now’s recommended policy change for Indiana would help Alexis’ family and thousands like it to take important steps toward a better future.
Eighteen months ago Alexis’ mother had never heard of a 529 and establishing a college savings account was not on her mind. At registration, her school made it easy to learn about the Wabash County Promise and start a 529 account for her daughter, right next to the table to sign up for the bus. In less than four minutes, Alexis had a College Choice 529 with the initial $25 investment in that account from Parkview Health. Alexis left the registration event that day with a certificate—a physical reminder that she has a college savings account.
Throughout the fall, Alexis and her classmates in Wabash County, all kindergarten through third grade students, explored what they want to be, discovered the education they need to get there, and identified the champions in their lives who will help them along the way. Following an exciting field trip to Manchester University with 1600 other kids from around the county, Alexis was off to share her future plans with her champions. By raising deposits totaling $25 or more from her champions—family, neighbors, teachers and her grandmother’s co-workers—Alexis received an additional $75 as a match from her community. Throughout October, six important adults in her life provided words of encouragement and made deposits into her Promise account totaling $135. Today, just 18 months after her 529 was established, Alexis has over $315 in her college savings account! With support from the Indiana Education Savings Authority (IESA), Parkview Health and Lilly Endowment Inc., even more communities will make it easy for families and champions to support youth like Alexis by making a local “Promise”.
The Promise helps communities leverage support for families to begin saving for higher education and for youth to begin college and career discovery. To learn how your community can become one of the pilots selected for the 2016-2017 school year, visit www.PromiseIndiana.org or view and complete the application at http://bit.ly/PromiseIndiana. Communities selected to pilot will have a unique opportunity to be one of the first in the state to receive operational support to launch the initiative and create meaningful outcomes for youth and families.
For Indiana to thrive, we need to harness the potential of every young Hoosier. CSAs provide a low-cost, high-return strategy that communities can use to help kids develop the hope, support and assets needed to pursue their dreams. Let’s build a stronger Indiana!
[i] Assets and Education Initiative, Building Expectations, Delivering Results: Asset-Based Financial Aid and the Future of Higher Education, 2013
[ii] Elliott, W. (2013). Small-dollar children’s savings accounts and children’s college outcomes. Children and Youth Services Review, 35(3), 572–585
[iii] Prosperity Now. The steep climb to economic opportunity for vulnerable families, 2016.