One Good Idea: A College Savings Account for Every Child

A study finds that students who had saved between $1 and $500 were four times more likely to graduate than students with no savings at all.

This can only be used with Sophie Quinton's piiece which originally ran in the 7/19/2014 issue of National Journal magazine. Child's bank account for college.
National Journal
Sophie Quinton
Add to Briefcase
See more stories about...
Sophie Quinton
July 18, 2014, 1 a.m.

In Feb­ru­ary, Nevada star­ted open­ing a col­lege sav­ings ac­count for every child en­rolled in pub­lic kinder­garten. In March, a private Maine found­a­tion an­nounced it would de­pos­it $500 in­to a 529 ac­count — that is, a col­lege sav­ings plan — for every baby born in the state. And some time dur­ing the next school year, Col­or­ado plans to open col­lege sav­ings ac­counts for about 2,000 low-in­come preschool­ers.

(James Kacz­man)States, cit­ies, and counties hope that start­ing sav­ings ac­counts for kids will en­cour­age par­ents to plan for their chil­dren’s post­sec­ond­ary edu­ca­tion. The amount fam­il­ies save may not mat­ter, says Reg­gie Bicha, ex­ec­ut­ive dir­ect­or of the Col­or­ado De­part­ment of Hu­man Ser­vices (which is part­ner­ing with two oth­er state agen­cies on the pi­lot pro­gram). “What mat­ters is that they learn early about the im­port­ance of sav­ing — that they see col­lege as a real­ity in their chil­dren’s fu­ture.”

In­deed, re­search sug­gests that even small nest eggs can in­crease the odds that a child will earn a de­gree. A 2013 Uni­versity of Kan­sas ana­lys­is of the Pan­el Study of In­come Dy­nam­ics, a long-run­ning sur­vey, found that low- and middle-in­come stu­dents who had saved between $1 and $500 for col­lege were over three times more likely to en­roll and four times more likely to gradu­ate than stu­dents with no sav­ings.

Re­search­ers at Wash­ing­ton Uni­versity in St. Louis are con­duct­ing a ran­dom­ized con­trolled tri­al to test the ef­fect of giv­ing new­borns 529 ac­counts. Thirty months after the ex­per­i­ment began, 16 per­cent of fam­il­ies that re­ceived $1,000 in a state-owned ac­count had opened up 529 ac­counts of their own, and about 8 per­cent had star­ted to save in them.

Those per­cent­ages may sound small, but in most states only about 3 to 4 per­cent of chil­dren un­der 18 have a 529 ac­count in their name, says Mi­chael Sher­raden, dir­ect­or of the Cen­ter for So­cial De­vel­op­ment at Wash­ing­ton Uni­versity. Fam­il­ies giv­en a state-owned ac­count were more likely to open (and use) an ac­count of their own. In gen­er­al, wealth­i­er and more-edu­cated par­ents were more likely to be­gin and use ac­counts, but the re­search­ers also found that re­ceiv­ing a state ac­count in­spired some less-well-off fam­il­ies to open ac­counts. Chil­dren who re­ceived ac­counts in the study showed bet­ter so­cial and emo­tion­al de­vel­op­ment by age 4 than those who didn’t, and their moth­ers were less likely to de­vel­op symp­toms of de­pres­sion.

“What mat­ters is that they learn early about the im­port­ance of sav­ing — that they see col­lege as a real­ity in their chil­dren’s fu­ture.”

Reg­gie Bicha, ex­ec­ut­ive dir­ect­or of the Col­or­ado De­part­ment of Hu­man Ser­vices

The idea that the gov­ern­ment should es­tab­lish sav­ings ac­counts for all chil­dren has been cir­cu­lat­ing since the 1990s. In 2005, a bi­par­tis­an group of sen­at­ors pro­posed cre­at­ing sav­ings ac­counts for every new­born, but the idea didn’t be­come law. While sup­port at the fed­er­al level has stalled, loc­al pro­grams have taken off — in San Fran­cisco; in Cuyahoga County, Ohio; across the KIPP charter-school net­work.

It’s still not clear how best to design these ac­counts or what level of pub­lic, private, or fam­ily con­tri­bu­tions will make the biggest dif­fer­ence. Bicha’s team has pro­posed a three-year pi­lot in Col­or­ado that — like many sim­il­ar pro­grams — would op­er­ate as a pub­lic-private part­ner­ship. The state would open 529 ac­counts for chil­dren at­tend­ing state-fun­ded preschool, and private donors would match a por­tion of fam­ily sav­ings with dona­tions. (To be eli­gible for the Col­or­ado preschool pro­gram, chil­dren must be from dis­ad­vant­aged fam­il­ies.)

Bicha hopes to prove that the link between sav­ing for col­lege and do­ing well in school will hold for very young chil­dren. He wants “to show that chil­dren who have a chil­dren’s sav­ings ac­count “¦ will be more likely to be pre­pared for kinder­garten on our kinder­garten as­sess­ment, that they’ll be more likely to read in third grade when we do our third-grade read­ing scores.” Most of all, he wants more par­ents to be­lieve that their preschool­er is col­lege bound.

What We're Following See More »
AND POLICE OFFICERS IN EVERY SCHOOL
Gov. Scott Wants to Raise Gun-Purchase Age to 21
1 hours ago
THE LATEST
SAYS WE NEED “OFFENSIVE CAPABILITIES” AT SCHOOLS
Trump Wants Concealed Carry at Schools
2 hours ago
THE DETAILS

At the 2018 Conservative Political Action Conference, Trump announced his support for allowing teachers to carry concealed firearms at schools. "Why do we protect our airports, our banks, our government buildings, but not our schools?" Trump asked the audience. "It's time to make our schools a much harder target ...When we declare our schools to be gun free zones, it just puts our students in far more danger." Trump said that roughly "10 or 20 percent" of teachers were very adept with guns, and that "a teacher would have shot the hell out of him [the shooter] before he knew what happened. They love their students, folks, remember that."

Source:
IN THE WAKE OF NEW CHARGES
Gates Expected to Plead Guilty, Cooperate with Mueller
2 hours ago
THE LATEST

Former Trump campaign adviser Rick Gates is expected to plead guilty to a raft of new tax and fraud charges filed against him by special counsel Robert Mueller on Thursday. Gates is expected to cooperate with Mueller's investigation.

Source:
IMPLICATES DOZENS OF TOP SCHOOLS
Sweeping Federal Probe Reveals Underground NCAA Economy
3 hours ago
THE DETAILS

Documents from a federal corruption investigation into the "underbelly of college basketball" detail an extensive recruiting operation implicating at least 20 Division I basketball programs, including Duke, North Carolina, Texas, Kentucky, Michigan State, USC, and Alabama. "The documents ... link some of the sport’s biggest current stars to specific potential extra benefits for either the athletes or their family members. The amounts tied to players in the case range from basic meals to tens of thousands of dollars." NCAA president Mark Emmert said the allegations, if true, "point to systematic failures that must be fixed and fixed now if we want college sports in America."

Source:
TENSIONS RISE AS OLYMPICS NEAR END
Trump To Announce New Sanctions Against North Korea
3 hours ago
THE LATEST

Donald Trump is expected to announce a new round of sanctions against North Korea during his speech at the Conservative Political Action Conference, or CPAC, later this morning. The Treasury Department "will get into the details later in the day," although a senior administration official called the new penalties "'the largest package of new sanctions against the North Korea regime.'" Pence blasted North Korea in his speech to CPAC, calling Kim Jong Un's sister Kim Jo Yong, who reportedly pulled out of a meeting with him at the Olympics, “a central pillar of the most tyrannical and oppressive regime on the planet.”

Source:
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login