Children’s Savings Accounts (CSAs)
On this Page: (scroll down to visit each section listed here)
- What Are Children’s Savings Accounts?
- CSAs in the News
- CSA Research
What Are Children’s Savings Accounts?
What is a CSA?
Children’s Savings Accounts (CSAs) most often refers to a savings account opened for the benefit of a very young child—at birth or by kindergarten age—into which a third party, such as a city, a nonprofit, a foundation, a parent, or others can deposit funds that are to be disbursed for postsecondary education expenses.
Often the third party deposits “seed” funds to start the account and may provide additional “match” when the child or family meets benchmarks over time, such as regular deposits or school attendance. Click here to review a CSA Primer from AFN
What are the goals of a CSA?
CSAs have two general goals:
- To build savings for the child, thus creating expectations for postsecondary education; and
- To encourage the family to develop savings habits.
What savings vehicle is used in a CSA?
The type of account will vary. Many are linked to College 529 investments. Some use savings products developed especially for the CSA program, and some use basic savings account options with a custodian and the child as beneficiary.
Who actually holds the account?
Who holds the account--the third party or even the child alone--varies by project design. Usually such accounts are custodial, with the third party as the custodian and requiring the third party’s signature for disbursement. In some cases there may be an account opened by the third party that holds subaccounts for each participating child. The omnibus account may be a College 529 investment, or an omnibus account held by a traditional financial institution. Sometimes, there is a parallel account opened by the parent on behalf of the child.
At what age are CSAs opened?
Most CSAs open accounts for very young children, at birth through kindergarten; but some start accounts for older children and youth, for example for fourth-graders or middle-school students.
How are CSA savings spent?
The vast majority of CSAs limit use of the balances to costs of postsecondary education. A few, not linked to 529 accounts, allow other uses, including pre-college expenditures for education related purposes such as tutoring or computers. Postsecondary disbursement is directly to the educational institution, not to the child or parent.
Could you share some basic research I can cite as to CSA effectiveness?
There is a constant stream of new reporting and research on how CSAs affect children and their families, the development of college-going identity and financial plans. Here are a few of the foundational reports. The Research section of this page (scroll down to review) summarizes new work on a regular basis.
CSAs in the News
Boston Schools CSAs in Action
Boston Public Schools long-planned CSA project is under way. Five pilot schools and the various financial institutions involved began working with parents to open savings accounts this fall. The Eos Foundation footed the bill for much of the planning, loaning consultants and supporting key staff for planning and implementation, as well as helping out with ongoing operations and incentive costs. Kick off events at individual schools vary from reading books about financial topics to a musical review by Miss Money and the Coins. For more information, go to https://www.boston.gov/finance/boston-saves
The Big Apple Gets a Big New CSA
Starting next fall, thousands of New York City kindergartners will start savings accounts in a three-year pilot program intended to increase the number of low-income children who go on to college. Funding comes from a $10 million donation by Jon Gray, the global head of real estate at the investment firm Blackstone Group, and his wife, Mindy. The first accounts will first serve children in public and charter schools in one of 32 community school districts. Managing the project is a new nonprofit, NYC Kids Rise, who board includes mayoral and school district leadership.
The pilot will include families of about 3,500 children. One goal is to introduce low-income families to the 529 accounts, where deposits grow tax-free if used for higher education. The initial $100 contributions will be deposited into an omnibus 529 account, so that undocumented immigrants, who do not have the Social Security or individual taxpayer identification numbers needed to set up individual accounts, can participate. If the family meets certain benchmarks over four years, such as saving small amounts of their own money, they will be eligible for another $200. At the same time, families will also be encouraged to start their own individual 529 accounts for saving. The city will use its financial empowerment centers to educate parents and encourage them to open the parallel accounts for their children. READ MORE
IDAs in Action - the Transformative Power of Access to Financial Knowledge and Opportunity
Prosperity Kids, the CSA program initiated in 2013 in New Mexico, is featured in an in-depth video from New Mexico public broadcasting. After a general introduction on asset building as an antipoverty tool, the film cuts to interviews with parents and children involved with Prosperity Works, the parent organization for Prosperity Kids. Current and former IDA participants speak about the transformative power of savings and financial knowledge. The children speak of their plans for the futures, and parents describe changes in their children's views of savings.
The piece is part of a series, Chasing the Dream: Poverty and Opportunity in America, a multi-platform public media initiative on the impact of poverty. The JPB Foundation provided major funding for the series, with additional funding from the Ford Foundation. CLICK HERE to watch the video.
NLC Names New CSA Cohort
The National League of Cities Institute for Youth, Education, and Families launched a City-Led Children’s Savings Account Peer Network in summer 2016. The Peer Network currently includes 13 municipalities focused on designing and launching a CSA program, including Boston, MA; Chelsea, MA; Durham, NC; Garden City, MI; Louisville, KY; Los Angeles, CA; Milwaukee, WI; Oakland, CA; Ogden, UT; Pittsburgh, PA; Plainfield, NJ; San Francisco, CA; and St. Louis, MO. Cities will participate in quarterly calls on topics such as post-secondary success linkages, CSA funding strategies, building effective city-wide financial inclusion systems, and designing CSA program evaluation and metrics.
Brandeis University releases a Literature Review on "Key Features and Outcomes of Children's Savings Account Programs".
Loya, R., Garber, J., Santos, J. (March 2017) Levers for Success: Key Features and Outcomes of Children's Savings Account Programs. Waltham, MA: Brandeis University, Institute on Assets and Social Policy: Heller School for Social Policy and Management.
Today, more than half of families with children (52%) are asset-poor, meaning they do not have enough savings to live at the federal poverty level for three months without an income ,
let alone pay for higher education. Children’s Savings Account (CSA) programs provide savings or investment accounts and nancial incentives to children for the speci c purpose of funding postsecondary education or other asset-building.1 Beyond their nancial role, CSAs are associated with bene cial effects on parents and children across a range of domains, including educational aspirations, socioemotional development, college access, academic success, and equity. Numerous states, cities, localities, and organizations across the United States have begun sponsoring CSAs in recent years. However, no consensus has been reached on the optimal structure for CSA programs.
The purpose of this literature review is to identify features of CSA programs that are associated with high levels of uptake and engagement by low- to moderate-income (LMI) families, as well as features that contribute to the long-term sustainability of CSAs. To that end, this literature review examines the empirical research on ve key features of CSAs that make them a promising policy strategy for economic inclusion.
Childcare, Health and Development - Children's Savings Accounts
Huang, J., Kim, Y., Sherraden, M. (August 2016)
Background: Research has established a negative association between household material hardship and children's mental health. This study examines whether Child Development Accounts (CDAs), an economic intervention that encourages families to accumulate assets for children's long-term development, mitigate the association between material hardship and children's social-emotional development.
Methods: Researchers conducted a randomized experiment of CDAs in Oklahoma, USA, with a probability sample (N = 7328) of all infants born in two 3-month periods in 2007. After agreeing to participate in the experiment, caregivers of 2704 infants completed a baseline survey and were assigned randomly to the treatment (n = 1358) or control group (n = 1346). The intervention exposed the treatment group to a CDA, which consisted of an Oklahoma 529 College Savings Plan account, financial incentives and financial information.
Results: Material hardship has a negative association with the social-emotional development of children around the age of 4 years. Estimates from regression analysis indicate that CDAs mitigate about 50% of the negative association between material hardship and children's social-emotional development.
Conclusions: Although they do not provide direct support for consumption in households experiencing material hardship, CDAs may improve child development by influencing parenting practices and parents' expectations for their children. We discuss the implications of using asset-building programmes to improve child development.
Making the Case for Children’s Savings Accounts (CSAs)
Poore, Anthony FEDERAL RESERVE BANK OF BOSTON (2017)
Children’s Savings Accounts (CSAs) are becoming increasingly popular among policymakers, researchers, philanthropic organizations, and community development professionals interested in the topic and practice of asset building. CSA literature tends to focus on how to operationalize CSA efforts, their potential impacts and most notably increasing amounts of interest in Interim Outcome Measures. What is often not discussed is the place CSAs occupy within the broader political economy and how CSAs can be leveraged in practical ways to support the interests of a broad array of policymakers at the state and municipal level.
CSAs require a high degree of cooperation, coordination, and collaboration across multiple sectors and public-sector political and fiscal support is critical to the long-term sustainability of these efforts. For that reason, discussion of CSAs must broaden its focus from delivery mechanisms, program design, logic models, and mechanism of action to include an assessment of CSAs within the broader political economy and discussion of how best to respond to a broad set of interests and sensibilities, including the interests of policymakers.
Making the case for Children’s Savings Accounts (CSAs) can be challenging, however; policymakers are more likely to support CSAs when they understand the political and economic benefits attached to doing so.
Transforming 529s into Children’s Savings Accounts (CSAs): The Promise Indiana Model
Elliott, W., Lewis, M., AEDI (2015)
State 529 plans are tax-preferred vehicles for post-secondary education saving, administered by states, usually through contractual agreements with private financial institutions. In large part, 529s have served to intensify the distributional advantages that already accrue to more economically-privileged households. However, a small, but growing number of states are attempting to transform their 529 programs into Children’s Savings Accounts (CSAs) programs so that they better serve children and families disadvantaged economically and educationally. However, there has been little discussion about what might differentiate a CSA program administered through a 529 from a standard state 529 program. Using the case of Promise Indiana’s 529-based CSA as an example, this paper outlines what we believe to be some of the critical elements of Children’s Savings Accounts and the ways that they may help to change the distributional consequences of our current educational and economic systems, such that they facilitate, rather than frustrate, the aspirations of disadvantaged children. The paper traces the origins and evolutions of Promise Indiana, within a discussion of components of 529-based CSAs, identifies design features that align with Identity-Based Motivation, outlines the rationale for a wealth transfer within CSAs, and shares lessons for replication. The Promise Indiana’s model may be relevant in other parts of the country, particularly as communities consider how to address imperatives related to educational attainment gaps and rising student indebtedness, as well as their implications for upward mobility and broader prosperity.
The Power of CSAs to Reduce Wealth Disparities
Laura Sulllivan, Tatjana Meschede, Thomas Shapiro (IASP), and Dedrick Assante-Muhammed, Emanuel Nieves (CFED)
Building on economic modeling developed by the Institute for Assets and Social Policy, the authors highlight a small number of strategies with large potential to reduce wealth disparities. One of them is Children’s Savings Accounts--if they incorporate the concept of targeted universalism. Targeted universalism emphasizes benefits based on existing needs and barriers and calls for progressive incremental support for lower wealth households than for higher-wealth households. Citing previous research, the authors argue that the best CSA programs are both universal and progressive: a savings account for every child in the target group, and greater initial deposits and/or savings matches for youth from economically vulnerable households. They state, “… if the design of a CSA policy were based on household wealth, it would likely do a better job of reducing wealth disparities than if eligibility were based on income.”
Designing Sustainable Funding for College Promise Initiatives: Children’s Savings Account Models
William Elliott, AEDI and Andrea Levere, CFED
This paper is one of a series from a June convening by the Education Testing Service on sustainability for College Promise projects. Promise projects, which typically guarantee all or part of tuition expenses for one or more years of postsecondary education for high school graduates of specific schools or districts, and Children’s Savings Accounts have been emerging simultaneously around the country. The report reviews strengths and challenges of Children’s Savings Accounts and College Promise models and suggests ways that deliberate coordination could increase postsecondary enrollment and completion, especially for disadvantaged and minority students.
Teacher Expectations Predict Student Achievement
Nicholas W. Papageorge. Seth Gershenson., Kyungmin Kang. (2016)
A new brief from the Brookings Institution demonstrates the positive and negative effects of teacher expectations as a predictor of college completion. The authors show that lower expectations, especially for Black students, result in significantly lower completion. Why does this matter for CSAs? Teachers who know a student has a CSA may have higher expectations, which are communicated to the student and which affect student performance. This effect could begin even for very young students, and teacher expectations could be an early indicator for CSA projects to measure. The National Science Foundation supported this research via a grant to the American Educational Research Association.
Early Is Better: What Does the Research Say about Early Awareness Strategies for College Access and Success?
Glaser E., Warick. C, National College Access Network (2016)
Early awareness strategies encourage low-income and first-generation students to gain the information, skills, and resources they need to succeed in higher education and constitute first step of an integrated plan for student success, says this March 2016 report. The authors survey a range apparently effective strategies but also note that few projects to date have rigorous, longitudinal evaluations in their designs. Included in their review are savings accounts for children. Citing work by Sondra Beverly, William Elliott and others, the authors conclude that encouraging young students to create savings accounts can be part of early awareness programs that are simple and beneficial. The Charles Stewart Mott Foundation supported this work.
Latino Immigrant Families Saving in Children's Savings Account Program against Great Odds: Prosperity Kids
Lewis, M., O'Brien, M., Elliott, W., Harrington, K., Crawford, M. (2016) Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.
This study explores saving by low-income Latino families, most of whom are immigrants, within a CSA conceived and managed by Prosperity Works, a nonprofit organization in New Mexico. The report details amounts and frequency of deposits but also emphasizes that it is not the amount saved per se but the savings relative to available resources that underlies the transformational effect of CSAs. The project, funded by the W. K. Kellogg Foundation and the City of Albuquerque, with additional support from the Partnership for Community Action and other sources, had opened just under 500 CSAs, and many families also had emergency savings. Parents were positioned as their children’s financial educators, an important element of the project design. The data suggest that CSAs may be most successful if local organizations are able to innovate unique features that align with populations’ needs and to layer on culturally-relevant engagement strategies, rooted within existing programs and institution. Kellogg and the Charles Stewart Mott Foundation supported the data collection, analysis and production of this report.
Saving and Educational Asset-Building within a Community-Driven CSA Program: The Case of Promise Indiana
Lewis, M., Elliott, W., O'Brien, M., Jung, E., Harrington, K., Jones-Layman, A. (2016) Lawrence, KS: University of Kansas, Center on Assets, Education, and Inclusion.
AEDI researchers distinguish between Children Savings Accounts (CSAs) interventions and Children’s Savings Account Program interventions. Children’s Savings Account research typically focuses on how asset accumulation or account ownership influence outcomes such as parents’ and children’s educational expectations, savings behavior, and/or overall well-being. CSA Program Interventions, however, include accounts but also have a number of other programmatic components aimed at addressing academic and other deficits that have arisen from a history of conjoined asset and racial inequality. These components, such as mentoring, college/career planning, and media campaigns adopted are based on different academic theories and practical considerations such as demographics, funding, and systems (e.g., schools, local government). The report brings together three separate studies that use data from a staff survey of parents involved in Promise Indiana, deposit data from Ascensus College Savings (the 529 administrator for Indiana), and qualitative interviews with parents to begin to tease out the effects and interactions of various programmatic elements. This work is, in part, an effort to respond to the needs of funders and potential funders and stakeholders to begin to envision “best practices” for CSAs, a long-term strategy that has yet to mature with children actually entering postsecondary institutions. An additional feature of this paper is the detailed review of past and present variations of key CSA design elements, such as opt-in/opt-out and communications with parents, and their effects on participation, sustained participation and development of a college-going culture for both children and parents. Complementing these summaries are discussions of the theoretical underpinnings for the effects of CSAs on identity, motivation and other personal dimensions of the participant experience. The Lilly Endowment and the C.S. Mott Foundation supported the development of the tripartite report.
GE Foundation Notes “Essential Skills”
Catherine Gewertz. "Low-Income Students Need More Than Just a College Degree, Report Says." Education Week. (2016)
The GE Foundation, which supports college access and career readiness for low-income and minority students, has published a report on how to improve students’ success in the work place: “New Dimensions of College and Career Readiness.” In addition to mentoring, internships and improvement of ways to impart technical skills, the report notes the importance of “Developing ‘essential skills’ such as higher aspirations, teamwork, grit, perseverance, and adaptability.” These essential skills resonate with findings from CSA research on how children and parents develop and retain aspirations and learn to normalize effort to realize their college-going identities.
2016 AFN EVENT: Meet in the Middle to Magnify Success: Early Distribution Scholarships and CSAs
Research on strategies to increase college enrollment and completion, especially for low- to moderate-income students, is showing the effects of earlier awareness and engagement with scholarship opportunities. At the same time, CSAs are showing measurable effects on development of essential social and emotional skills for very young children, as well as on academic success. Effects are greater for lower-income children.
Benita Melton, Education Program Director of the Charles Stewart Mott Foundation, moderated presentations by Martha Kanter, Executive Director of the College Promise Campaign and former U.S. Under Secretary of Education, and Patty Grant, Executive Director, Community Foundation of Wabash County. The panelists offered an in-depth discussion of how joining earlier distribution of scholarships with CSAs can strengthen each strategy by building on their strengths while addressing inherent challenges of each alone.
2016 EVENT: Texas Talks More About CSAs and Education
On August 25, 2016, Philanthropy Southwest and AFN’s North Texas Regional Chapter hosted The Education/Assets Connection. The discussion for funders took place at the Lena Pope Amon Carter Center in Fort Worth. Alfreda Norman, Senior Vice President for Communications and Public Outreach, Federal Reserve Bank of Dallas led an informational interview with Anthony Poore, Deputy Director of Regional and Community Outreach, Boston Federal Reserve. Rose Bradshaw, Executive Vice President, North Texas Community Foundation, led a discussion with Rob Podlogar, National Director, the Siemer Institute for Family Stability. For background materials, click here.
2016 AFN EVENT: CSA Roles for Funders Highlighted at Dallas Roundtable
May 11, 2016; Hosted by the Federal Reserve Bank of Dallas, AFN recently brought together more than 60 representatives of foundations, financial institutions, municipal, and community-based entities to learn about the multiple models for Children's Savings Accounts and various roles funders may play in supporting them. Discussion explored findings and the role of philanthropy from four different CSA initiatives; two new school-based pilot projects in Texas, an initiative that builds on existing service streams, such as Head Start, and another approach leveraging the commitment of the business and economic sectors of the community combined with the school-based enrollment of kindergartners.
To download a fact sheet on each of the CSA projects discussed, click on the project title below:
2016 AFN EVENT: Interim Benchmarks for CSAs: What to Measure
AFN partnered with the New England Children’s Savings Account Consortium to present a webinar on Identifying Short Term Outcome Metrics for Evaluating Whether Children’s Savings Accounts Programs Are on Track. More than 100 registrants listened to William Elliott, executive director of the Center of Assets, Education and Inclusion at the University of Kansas; and Anthony Poore, deputy director, regional and community outreach, Federal Reserve of Boston. The New England CSA Consortium, with support from the Boston Federal Reserve, had commissioned the paper, released on April 12, 2016.
Poore and Elliott addressed the challenge of measuring the impact of CSAs at points prior to actual distribution for college expenses. It is important to know whether CSA projects are on track to help close the college attainment gap. Proposed were measures of savings behavior, socio-emotional development, math and reading proficiency, and child and parents’ expectations.
Click here to review the slide presentation and webinar recording.
NEWS: Technology Enhances CSA Efforts in MA
Leveraging Technology to Support Children’s Savings Accounts. This article in Communities and Banking (Federal Reserve of Boston) describes why and how Inversant, a Massachusetts CSA and scholarship program provider effectively modified and extended its use of technology to increase savings and other involvement of families.
NEWS: Foster Youth to Have Matched Savings in Maine
In late May 2016, the Maine Youth Transition Network launched a program to seed college savings accounts for youth and young adults involved in Maine's child welfare system. Becca Matusovich, policy associate at the Muskie School of Public Service at the University of Southern Maine, is leading the effort, in partnership with Maine's Department of Heath and Human Services and the Finance Authority of Maine's NextGen program. This initiative will provide youth in foster care who are ages 14 to 17 with NextGen 529 accounts, starting with $300 in seed money and matching
CSA PROGRAM PROFILE: ONAC - Building on CSAs to Build Native American Assets
While a few universal Children’s Savings Accounts may have Native American participants, one project focuses entirely on Native American communities. The Oklahoma Native Assets Coalition (ONAC), which has promoted asset building for 15 years, added CSAs to its long-term strategy in 2012. ONAC worked with TIAA to establish systems for account openings with the Oklahoma 529 and Missouri’s 529 College Savings Plans to accommodate residents of both states; identified financial institutions to partner with ONAC to open savings accounts for youth; and secured funding. Accounts may be opened under 529s or with individual financial institutions, and tribal organizations may choose whether to make the accounts custodial. Outside of the 529s, uses of the savings and match may range beyond postsecondary education, depending on tribal preferences. ONAC provides the opening account deposit (ranging from $100 to $200, depending on funding source and partners), a piggy bank with the ONAC logo, a certificate celebrating their account, and an ONAC Native-specific financial education booklet. Each tribal organization sets its own terms for subsequent match it provides and conditions to receive match.
As of December 2016, there were 15 tribes or Native American nonprofits, working as partners with ONAC, to open 316 ONAC-funded accounts (where ONAC directly sent in an opening deposit check per account). ONAC also funded Children’s Savings Account minigrants to four partners to open and fund 75 more accounts, for total of 391 ONAC-funded accounts). CSAs are linked with a range of services managed by the tribes and nonprofits, such as Head Start, child support, housing, CDCs, CDFIs, elderly services, youth employment, and athletic programs. Funding to design and implement the projects has come from the W.K. Kellogg Foundation and First Nations Development Institute, with support of the Ford Foundation. The foundations have slightly different terms for the age and household income of youth who may participate. So far, the majority of account holders live in households with incomes at or below 200% of the federal poverty threshold. Between the two funders, the goal for 2018 is a total of 635 accounts. Most accounts to date are in either Oklahoma or Missouri 529 programs (some members of Oklahoma-based tribes live in Missouri); the remainder are with local financial institutions. A First Nations grant specifically supports the cultural dimensions of the work.
CSA PROGRAM PROFILE: Reidsville Children’s Initiative: Building CSAs with A Family Approach
The Reidsville Area Foundation (RAF) has had a small but successful initiative for out-of-school educational enrichment for children and financial education for their parents. Now these children have CSAs to reinforce their educational expectations. The foundation, active in Rockingham County in the Piedmont Triad of NC since 2001, had been working to coordinate services for children and parents in public housing through its NorthStar Children’s Initiative. Previous activities included parent participation in financial education and learning to advocate for their children at school. Their children enjoyed out of school activities, including summer camp, campus visits, and academic support. Seeing success with parents asking for more financial information and some becoming self-sufficient, RAF researched ways to do more to boost children’s and families’ odds at moving up the economic ladder. Staff landed on matching savings for the children as a way to help families develop a savings habit, as well as to build resources for their children’s postsecondary education.
As of November 2016, there were 8 CSAs open, and three had deposits in addition to the seed funds. One family had made four deposits. The accounts begin with a $100 deposit when the children enter kindergarten, but enrollment takes place at ParkView Village, the local housing authority, and parents must choose to enroll their students. The foundation will match up to $250 a year through 5th grade graduation for a maximum amount of $1,500 that can be used for education only. In addition, the foundation will consider linking matches to benchmarks such as making the honor roll, attendance, or doing community work during middle and high school years.