Children’s Savings Accounts: How Cities are Helping Families Save for College

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Every family should have the opportunity to save for their children’s future, but this is simply not the reality for many low- and moderate-income families.

CGI America2From left to right: Laura Owens, ‘I Have a Dream’ Foundation; Heidi Goldberg, National League of Cities, Michael Sherraden, Center for Social Development at Washington University; San Francisco Treasurer José Cisneros; St. Louis Treasurer Tishuara Jones; Governor John Hickenlooper; and Andrea Levere, CFED President onstage with President Bill Clinton for the announcement of the Campaign for Every Kid’s Future at CGI America. (photo: CGI)

The National League of Cities is proud to join CFED and over a dozen other partners in launching the Campaign for Every Kid’s Future. Announced this week on stage with President Bill Clinton at the CGI America Conference in Denver, the Campaign will work to ensure that 1.4 million children have a savings account for college by 2020.

Children’s Savings Accounts (CSAs) are a proven two-generation strategy for helping children and their families move up the economic ladder. Higher education — the surest route to economic success — is within reach when conversations about college happen at an early age. In fact, evidence shows that children with a savings account in their name are three times more likely to enroll in college and four times more likely to graduate, even if they have as little as $500 or less in that account. CSAs, particularly locally-led CSA programs, often include the following components:

  • A savings account,
  • Parent/guardian engagement in helping with deposits,
  • Incentives to save, such as cash matches, and
  • Financial education for children and their parents/guardians.

In addition to our partnership with CFED on the Campaign for Every Kid’s Future, we’re launching a new project to work with cities to help them plan, develop and implement locally-led CSAs. These cities will have the opportunity to connect with each other and with experts in the field to develop their own blueprints for local action in developing or enhancing CSA programs.

As President Bill Clinton eloquently noted in his opening remarks, there are no silver bullets, but there are thousands of actions we can take that, in the aggregate, can improve the lives of children and families. Implementing a CSA program is one such action. President Clinton recognized the need to highlight successful local actions and initiatives at high-profile events such as CGI America, with the hope that other cities will take what they learn and replicate programs in a way that works for them.

And there are many communities interested in replicating CSA programs, according to a recent NLC scan of local financial inclusion efforts. Our latest report, City Financial Inclusion Efforts: A National Overview, highlights the results of our scan and reveals that emerging financial inclusion strategies, such as CSAs are currently under discussion or in development in cities across the country.

There are several cities already actively engaged in this work, some of whom, such as San Francisco and St. Louis, have signed on as partners to the Campaign for Every Kid’s Future.

In 2010, San Francisco Treasurer José Cisneros started Kindergarten to College (K2C), the first publicly funded, universal children’s college savings account program in the U.S. K2C provides a college savings account with a $50 deposit for every child entering public kindergarten in the city. In St. Louis, Treasurer Tishaura Jones’ office is launching the St. Louis College Kids program this fall. Based on San Francisco’s model, every public and charter school kindergartner in St. Louis will receive a savings account with an initial $50 deposit from the City of St. Louis Treasurer’s Office to help families save for their children’s education.

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About the Author:
Heidi Goldberg is the Director for Economic Opportunity and Financial Empowerment in the NLC Institute for Youth, Education, and Families. Follow Heidi on Twitter at @GoldbergHeidi.