One of the highlights of the 2018 Prosperity Summit was a discussion between four trailblazing mayors -- Melvin Carter of Saint Paul, MN; Libby Schaaf of Oakland, CA; Michael Tubbs of Stockton, CA and Victoria Woodards of Tacoma, WA. The conversation included the mayors' experiences operating CSAs, as well as plans to establish CSA programs in the future.
Prosperity Now would like to thank the Prudential Foundation, the Charles Stewart Mott Foundation and the Richard W. Goldman Family Foundation for their generous, ongoing support of Prosperity Now's CSA work and the Campaign for Every Kid's Future, which allowed us to hold the CSA pre-conference.
New Field Scans Take an In-Depth Look at CSA Funding and Policy
Prosperity Now released two briefs on October 12 to kick off a three-part series, An In-Depth Look at the CSA Field. Drawing on data collected in the 2017 CSA program survey and interviews with CSA program staff, the briefs identify emerging trends, supports and barriers in CSA implementation and policy that can help inform further research and provide guidance to the field on promising practices.
The first brief focuses on how CSA programs secure financial resources to support their initiatives and the implications for program sustainability. The second brief explores the state and local CSA policy landscape. Read more.
Pennsylvania will join other states with statewide CSA programs including Rhode Island and Maine, significantly advancing towards universal CSA coverage in America. Rhode Island's CSA program CollegeBound Baby began serving families in 2015 with a $100 initial deposit towards postsecondary education expenses. In Maine, the Harold Alfond College Challenge seeds CSAs with $500 for every child born as a state resident.
Rolling out the Keystone Scholars program will be a collaborative effort between the Pennsylvania Office of the State Treasurer, Governor Wolf and Pennsylvania state lawmakers. Rather than use Pennsylvania taxpayer money, the initial deposits will be funded by a combination of surplus funds from the Treasury’s Guaranteed Savings Plan and private donations.
Reinventing CSA Policy to Address the Racial Wealth Divide
Low initial deposits do not help close the racial wealth divide. The most common initial deposit for a CSA is $50 -- an amount that reflects funding realities for nonprofit practitioners ad state and local governments, but is not designed to address the dearth of wealth found in so many communities of color.
New data on the racial makeup of CSA accountholders. Our report reveals previously unpublished Prosperity Now research on the demographics of CSA accountholders. We estimate that 51% of children with CSAs are White, 27% are Latino, 11% are Black, 6.5% are Asian or Pacific Islander, .2% are American Indian or Alaska Native and four percent are "other" or multiracial.
Higher education alone is not the solution. As we discuss in the report, Black college graduates aged 22 to 28 suffer unemployment rates twice as high as equally credentialed peers in the same age range. We need to equalize returns to education among all racial groups to decrease the racial wealth divide.
Five Themes Shaping the Growth of the Children's Savings Movement
The field is energetic, enthusiastic and highly collaborative. Like other CSA gatherings, participants at this event were eager to share new ideas, discuss overarching issues that affect the scalability of CSAs and learn from others' successes and challenges.
People enter CSA work with different approaches and objectives. Participants at the event expressed diverse perspective regarding the purpose of CSAs. One lively discussion examined the relative importance of families making deposits to grow kids' accounts versus building account balances through program-provided funds.
Some CSA programs are focusing on outcomes that go beyond higher education and economic mobility. These outcomes include health and civic engagement.
Universal eligibility remains a key pillar of CSA design. However, many programs are trying to make a more targeted approach within a universal framework. While many practitioners think universal participation is an important way to build buy-in and community support, they also want to make sure that their programs benefit low-income households and children of color.
The expansion of the field calls for more guides, resources and standard tools on starting and operating CSA programs. For example, participants raised the idea of a research clearinghouse and a funding playbook.
What the Recent Tax Bill's New 529 Rules Mean for CSAs
In December 2017, Congress made sweeping changes to the tax code with the Tax Cuts and Jobs Act. Of particular relevance to the Children's Savings Account (CSA) field, the federal legislation expanded the allowable uses of 529 college savings plans to include withdrawals of up to $10,000 annually for K-12 tuition. Since more than half of CSA programs use 529 plans as their account vehicles, CSA program managers and other supporters have been trying to understand the implications of the 529 rule changes.
To provide the latest information and guidance on this important topic, the Campaign for Every Kid's Future released a new brief co-written by Prosperity Now, the Center for Social Development at Washington University in St. Louis and New America. This paper answers many questions raised by 529 rule changes and will help programs think through their future course of action.
Prosperity Now Hosts Convening on CSA Information Systems
In partnership with the City of San Francisco’s Office of Financial Empowerment (OFE), Prosperity Now hosted a meeting on March 15 to explore the primary information system needs for Children’s Savings Account (CSA) practitioners. Though the topic may sound dry for lay observers, the “CSA Information Systems” convening was a captivating event that brought together an experienced group of CSA practitioners with representatives from a range of financial services and financial technology firms. Participants engaged in a series of facilitated discussions that explored the needs of the CSA field and the extent to which existing or new account providers could meet them.
The meeting was just one way that Prosperity Now is helping grow a more robust CSA marketplace, given that securing an appropriate, low-cost, user-friendly account platform continues to be one of the key barriers to starting a CSA program. Private sector participants at the event noted that the growing scale of the CSA field is attracting increased interest from firms in the financial services sector, but the lack of standardization across CSA programs presents a challenge in designing appropriate products. Read more.
New Report Shows Growing, Changing State of Children's Savings Movement
Prosperity Now just released The Movement Takes Off: The State of the Children's Savings Field 2017, an overview of findings from Prosperity Now's annual Children's Savings Account (CSA) survey. The survey asked CSA programs about several aspects of their design and operation, including the number of accounts, account incentives, wrap-around services for students and parents, and other critical program features.
Here are a key few finds from the survey:
More than 382,000 children have a CSA as of the end of 2017 -- a 22% increase from 2016.
Large programs -- those that enroll at least 2,000 children annually -- account for nearly 86% of the total children with a CSA.
Slightly more than half (54%) of programs use 529s as their account vehicle.
69% of programs receive support from the philanthropic community.
A a member of the Campaign for Every Kid’s Future, you are an ambassador to help spread the children’s savings movement across the country. You may frequently be contacted by practitioners or policymakers asking you for resources to help them start a CSA program in their own communities. Instead of digging through handouts you’ve amassed from conferences or searching for resources online, Prosperity Now has prepared a short guide to the best sources of information for starting a CSA. And don’t forget about the resource section of the Campaign website, which has key documents from programs and researchers across the field.
Campaign Mobilizes Against Tax Changes to 529s
The Campaign for Every Kid's Future mobilized against proposed changes to 529 college savings accounts as Republicans' tax reform bills passed the House and the Senate. We sent an email to Campaign members on November 7 and a series of tweets urging opposition to a proposal that would combine Coverdell Education Savings Accounts—a seldom-used tax-advantaged savings account for K-12 expenses, including private school tuition—and 529s. The Campaign asserts that this proposal would primarily subsidize wealthy families in paying for private K-12 schools and exacerbate the already inequitable tax benefits of 529s.
Senator Ted Cruz (R-TX) added the proposal as a late amendment to Senate Republicans’ sweeping revamp of the tax code that passed December 2. The House approved a similar 529 expansion effort in its tax reform bill. Members of the House and the Senate Conference Committees agreed on a final version of the legislation December 15, including the 529 proposal, in hopes of sending the bill to President Trump's desk this week.
Recent Expansion Reflects Broad Appeal of Children's Savings Programs
Children's Savings Account (CSA) programs have broad appeal with diverse audiences across the United States. That's why two pilots in different parts of the country -- New York City and northeast Arkansas -- are launching this fall.
New York City is set to enroll the first cohort of approximately 3,500 children from a school district in Queens in the NYC Kids RISE CSA program. This program is part of a three-year pilot. If successful, the program could expand to all kindergarten students in New York City.
The Arkansas Treasurer's Office has revamped the Aspiring Scholars Matching Grant program. The Treasurer's Office previously provided matching funds for low-income savers in the state's 529 plan, but will instead fund community-based CSA efforts moving forward. In the first pilot, the Treasurer's Office will partner with Crowley's Ridge Development Council to open CSAs for first-graders in Poinsett County.
It's not just these two pilots taking off! Innovative programs in Sanilac County, Michigan, the Marshallese community in Arkansas and several counties in Indiana (as part of Promise Indiana's expansion) are all enrolling new cohorts of children. Oakland Promise's Kindergarten to College program is doubling in size to 36 schools this year, and the Boston Saves program is expanding to six more schools. More on several of these programs can be found in "From the Field."
Taken together, these developments are significant steps toward making it easier for low-income families in big cities and small towns across the country to build savings for postsecondary education.
New State and Local Policy Resources Make the Case for CSAs
Fall is around the corner, which means that it is already time for legislators to start thinking about the next legislative session, especially since by November more than a dozen state legislatures will start filing bills and resolutions! Prosperity Now has two new resources that will help you make the case to your elected officials for including CSA legislation in their plans for next session.
The newest Prosperity Now Scorecard will provide you with information across five issue areas, including information about CSA policies in your state in the Education category. Other issue areas, such as Financial Assets & Income,
also have information that could be pertinent, such as policies that encourage savings (e.g. eliminating asset limits and adopting prize-linked savings programs).
The new State & Local CSA Overview is a great handout for familiarizing policymakers with the key features of CSA programs and the benefits of having a program in their state or city.
Take a minute to peruse the materials and forward them on to your legislators. The more information we can provide to bolster our arguments for supporting CSAs, the closer we get to connecting 1.4 million kids with CSAs by 2020!
Over the past few years, we've seen a lot of energy around Children's Savings Account (CSA) programs across the country, but the New England region has been particularly active. Three New England states -- Maine, Rhode Island and Conneticut -- now have statewide CSA programs in place, and both Boston and the Massachusetts State Treasurer's Office launched pilot programs last year.
A new study from Brandeis University's Institute on Assets and Social Policy (IASP), based on surveys and interviews with key stakeholders in the region, explores the reasons for this concentration of CSA activity and discusses how to replicate it in other places. Read more.
Additionally, Prosperity Now will host a webinar featuring speakers from IASP on September 14 at 2 p.m. EDT. Check back on the Prosperity Now Web site for a link to register.
A Busy Legislative Session for CSAs End
The conclusion of state legislative sessions around the country marked the conclusion of a productive legislative session for CSAs. Here are some highlights.
Illinois:H.B. 3691, which would create a universal CSA program, passed the House and Senate. Both houses of the legislature will likely reconcile their differing versions of the bill during a special session in late June or the fall.
Nevada:A.B. 475, which would create a universal CSA program, passed the legislature and was signed into law. The legislation codifies Nevada College Kick Start, which was introduced administratively by former Treasurer Kate Marshall, into statute. On a less positive note, the legislation stipulates that parents or guardians must claim their children's automatically opened account by the time they enroll in fifth grade or the accounts will expire.
California: Prosperity Now's Director of State and Local Policy, Solana Rice, testified in front of the State Assembly's Higher Education Committee in April in support of A.B. 34, which would create a universal CSA program for all children born in the state. The bill passed the committee 9-3, and we expect it will be on the agenda for the Appropriations Committee in the next session.
We look forward to building on this momentum to pass more CSA legislation next term.
What Works for CSAs: New Research for Inversant
Campaign for Every Kid's Future Steering Committee member Inversant, which runs a CSA program working with more than 10 community partners in Massachusetts, released a report in May that discusses its partnership with Chelsea Public Schools. The report offers a comprehensive view of how the predominately low-income Latino families participating in the program save and prepare for college. Among other findings, Inversant found that participating students were more likely to take math and science classes -- indicative of a higher likelihood of academic preparation for college.
Co-authors Dr. Bahar Akman and Yiming Shuang will host a webinar on the report's findings Wednesday, June 28 at 2 p.m. EST. This month, Inversant also joined the podcast world with a channel on SoundCloud; topics include the rising cost of college, student debt and CSAs.
CSA Legislation Moves Forward in Illinois and Oregon
Illinois and Oregon both have promising pending CSA legislation that will help improve children's educational outcomes and financial well-being. Illinois' bill, HB 3691, would automatically open a 529 college savings account for every child born in Illinois after 2018. The Illinois State Treasurer, who would serve as the account custodian, would seed each new account with an initial investment of $50. Low- and moderate-income families who save in their accounts would receive a dollar-for-dollar match up to $150 per year. The bill passed its first and second readings (with three amendments) and currently awaits a House floor vote. Campaign partner Illinois Asset Building Group (IABG), has worked tirelessly to get to the bill to this point, and the Campaign has already added its support for this legislation. Visit their Web site for more information on the legislation and how your organization can support it.
If pending legislation passes, Illinois and Oregon will join a growing number of states with statewide CSA programs including Nevada, Maine and Rhode Island.
Learning Series Aims to Spur CSA Program Development
Beginning later this month, Prosperity Now will host a four-part webinar series on CSAs. This series is designed to share knowledge and best practices with organizations interested in starting CSA programs to help them develop stronger, more sustainable programs. The webinar will feature guest speakers from leading CSA programs and partners across the country who will share their experiences and answer participants' questions.
For an overview of the webinars in the CSA learning series, click here.
Cities are a Hub for CSA Activity and Innovation
Cities have been a hub for Children's Savings Account (CSA) innovation, starting with San Francisco's launch of the first universal municipal CSA program, Kindergarten to College, which inspired the creation of many other city- and state-level programs. City leaders are increasingly pushing for CSAs as a strategy to promote higher education and economic development within their communities. Existing CSA programs serve a total of less than half a million children nationwide, so engaging cities with large numbers of children is a promising way to ramp up the impact of CSAs. Recently, municipal leaders in three cities – Los Angeles, CA; Milwaukee, WI; and Richmond, VA – have been thinking through policy questions and program design details for their respective CSA programs. [Read more]
ESAs and CSAs: Similar Names, Very Different Policies
We have recently observed an uptick in news stories and legislation about Education Savings Accounts (ESAs), which are individual flexible use accounts funded by states for families' private educational expenses. Given the new Education Secretary Betsy DeVos' support for school voucher programs, tax credits and ESAs, we expect to see continued discussion of this policy. The growth of ESAs poses a challenge for the field because -- though the names sound very similar -- the goals are completely different. [Read More]
Looking Back on 2016, Looking Ahead to 2017
This past year was another memorable year in the growth of the Children's Savings Accounts (CSA) field, with expansion in locations as varied as Hastings, MI and Boston, MA. By the end of 2016, nearly 313,000 children will have a CSA -- a 39% increase from the end of 2015. To document the continued growth of the field, CFED released a State of the Children's Savings Field report which highlights common features found in the 42 CSA programs currently operating in 29 states. Reflecting this expansion, the Campaign for Every Kid's Future also grew to 85 organizational partners and more than 400 individual members in 2016. To strengthen the field and support further expansion, CSA advocates and supporters participated in several national gatherings including CFED's Assets Learning Conference in September and a CSA symposium hosted by the University of Kansas' Center on Education, Assets and Inclusion in November. In 2017, we look forward to seeing new programs launch in Oakland, New York and Milwaukee, and on behalf of the Campaign, CFED will continue to provide opportunities for partners in the field to learn and connect with one another in the children's savings field.
Children's Savings Momentum Hits New York
Two recent developments have now made it possible for more children in New York to build savings for college. Next fall, as part of a new three-year pilot initiative, all 3,500 incoming kindergarten students in one school district in New York City will receive a $100 initial deposit in a CSA and additional incentives to save. And New York Governor Andrew Cuomo signed a recent bill into law that will enable individuals and families to split their state tax refund and direct a portion of the refund into New York's 529 college savings program at tax time. [Read More]
Children’s Savings Featured Prominently in 2016 ALC
The 2016 Assets Learning Conference (Sept. 28-30 in Washington, DC) provided a host of opportunities for CSA leaders to connect, share best practices and generate new ideas for moving the field forward.
CFED hosted a CSA pre-conference September 27, which brought together more than 50 experienced CSA practitioners, advocates, funders and policy champions.
In addition to robust discussions during the pre-conference session, the Assets Learning Conference highlighted CSAs in a number of ways. At the opening plenary, CFED’s President Andrea Levere challenged the audience to expand CSAs from 29 states to all 50 states. She also urged attendees to join the Campaign for Every Kid’s Future and help us reach the goal of connecting 1.4 million kids to CSAs by 2020.
Four sessions at the 2016 ALC focused specifically on children’s savings, providing attendees tools to design and launch CSA programs, the latest research on CSAs, and how to pitch their programs to different types of funders and elected officials.
Overall, the insights and new findings on CSAs shared at the 2016 Assets Learning Conference and pre-conference highlighted the incredible progress across the country over the past several years to expand CSAs and increase the effectiveness of programs. To read more about the CSA pre-conference and ALC sessions, visit our blog. If you would like to see speaker presentations and handouts from the CSA workshops and concurrent sessions, visit the Assets Learning Conference website.
CFED Releases A Growing Movement: The State of the Children’s Savings Field
Thirty-one percent of CSA programs open accounts for children automatically.
Programs are evenly split between offering custodial savings accounts through banks or credit unions and 529 accounts.
Foundations are a key source of support – nearly 72 percent of CSA programs receive foundation funding.
The report provides information on the number of accounts, funding sources, enrollment, account type, incentives, and more used by children’s savings programs across the country.
Israel Takes the Lead in Universal Children’s Savings
Israeli Finance Minister Moshe Kahlon recently signed legislation to create the “Savings for Every Child Plan,” after years of planning and advocacy by former Minister of Social Affairs, Isaac Herzog. Launching in January 2017, the program will automatically establish Child Development Accounts (CDAs) for every child under 18, which will be seeded with an initial deposit of 1000 Israeli shekels (approximately $260 US dollars)*. Each month, the National Insurance Institute will deposit 50 shekels, in addition to any deposits parents decide to make. 500 shekels will be contributed once the child turns 18, and if the child waits to withdraw funds until they turn 21 another 500 shekels will be granted. Parents can choose which account platform to use for their children. They may select an investment fund track and choose the level of risk, or they may select a traditional savings plan through a bank. A 2.65 billion shekel per year budget (about $689 million US dollars) has been allotted for the program.
The program aims to reduce social gaps, create equal opportunity for poor and middle class families, and increase financial literacy. Israel has one of the highest poverty rates of the Organization for Economic Co-operation and Development (OECD) countries, as well as high levels of socioeconomic inequality. Israel’s universal CDA program will attempt to change these dynamics through financial inclusion. Through this plan, young people will enter adulthood with at least 20,000 Israeli shekels (approximately $5,200) in their accounts, giving them a nest egg to pursue an education, homeownership or entrepreneurship.
*One Israeli shekel equals $0.26 US dollars.
2016 Assets Learning Conference to Feature a Robust Line-up of CSA Sessions
CFED’s Assets Learning Conference (ALC), held in Washington, D.C. from September 28-30, will provide great opportunities to learn more about CSAs and the latest developments in the children’s savings field. Whether you are a seasoned practitioner or new to the field, don’t miss this exclusive chance to hear from CSA leaders and connect with a network of practitioners, advocates and researchers!
CSAs 101: A Road Map to Designing and Launching Your CSA Program | Learn the basics of how to set up a Children’s Savings Account program. This session will use CFED’s Investing In Dreams design guide to provide an overview of key considerations in designing and launching a CSA program in your community.
CSA Fundraising 102: How to Pitch Your CSA Program to Funders | Learn about potential sources of funding for CSA programs and how to use research to build the case for CSA programs when speaking with foundations, corporations and individuals.
Advocating for Change: Advancing CSA Policy at the State and Local Levels | Gain insights about the opportunities and challenges for the adoption of CSA policies by states, cities and counties. Officials and advocates from state and city levels will discuss their support for CSAs and share ideas that are gaining traction with public officials across the political spectrum.
Children’s Savings Research and Implications for Policy and Practice | Hear about the latest research on the impact of CSAs on children and their families. Speakers will share their findings and discuss the implications for policy and program design.
To learn more about the Assets Learning Conference, and to register, visit assetsconference.org. Members of the Campaign for Every Kid’s Future receive a $50 discount on registration!
Introducing the New Campaign Website!
The Campaign for Every Kid’s Future now has a new and improved online home: savingsforkids.org! The website expands on the original Campaign website, with new graphics illustrating how Children’s Savings Accounts work and their impact on children, updates from the field and more. The website is an invaluable communications tool in our efforts to build awareness about CSAs, encourage more partners to join the Campaign and grow the CSA movement.
One of the most exciting features of the website is the robust resource section, which serves as an information hub for CSA resources from across the field. The section contains curated links to information on program design and implementation, such as design guides and sample program documents; policy and advocacy, including briefs, advocacy tools and sample legislation; and research on the impact of CSAs.
Partners can use the new website in a number of ways, including:
Introducing CSAs and explaining their benefits to interested stakeholders, prospective funders and community members
Connecting organizations interested in starting a CSA program with resources on program design
Recruiting new partners to sign up for the Campaign
We are grateful for the assistance of partners who helped create the website by providing feedback and submitting documents for the resource page. We hope this will be a valuable resource for the field. If you would like to submit resources for the website or have feedback on other features you’d like to see included, please contact Shira Markoff.
Leaders of the Pack: The Campaign for Every Kid’s Future Names Steering Committee Members
In the year since launching, the Campaign for Every Kid’s Future has grown significantly. We now have more than 60 organizational partners and political champions and over 200 individual supporters. These partners and supporters are essential to furthering the Campaign’s goal of connecting 1.4 million children with a CSA by 2020. That’s why we’re excited to announce the creation of a Campaign Steering Committee comprised of representatives from 12 partner organizations.
The committee members — all of whom are leaders in promoting and expanding CSAs — are:
Colleen Quint, Alfond Scholarship Foundation
Margaret Clancy, Center for Social Development at Washington University
Willie Elliott, Center on Assets, Education and Inclusion at Kansas University
Melinda Lewis, Center on Assets, Education and Inclusion at Kansas University
Leigh Phillips, EARN
Megan McTiernan, EARN
Laura Owens, “I Have a Dream” Foundation
Eugena Oh, “I Have a Dream” Foundation
Yiming Shuang, Inversant
Bahar Akman, Inversant
Beth Williams, Juma Ventures
Heidi Goldberg, National League of Cities
Jamie Nash, National League of Cities
Reid Cramer, New America
Justin King, New America
Amanda Feinstein, Oakland Promise
Vinh Trinh, Oakland Promise
Phil Maurizi, Promise Indiana
Tishaura Jones, St. Louis Treasurer
Erin Thiemann, Office of the St. Louis Treasurer
Committee members will play a critical role in guiding the Campaign’s priorities, activities and overall direction. They will also help to lead events and activities and engage in communications and recruitment efforts on behalf of the Campaign. We look forward to working with the committee members to further refine and execute on the Campaign’s strategy, so that we can move closer to our goal of expanding children’s savings nationwide.
Federal Policy Update: Introduction of the CSA OPPORTUNITY Act
Last week, Rep. Matt Cartwright (D-PA) and Rep. Reid Ribble (R-WI) introduced legislation to improve children’s savings accounts across the country and eliminate disincentives for low-income families to save. The CSA OPPORTUNITY Act would exempt all savings in children’s savings accounts from public benefit asset limits. These asset limits, some set by state policy and others by federal policy, currently penalize lower-income families who save as little as $1,000 for their children. In Rhode Island, for instance, low-income families who benefit from that state’s generous universal, at-birth CSA program, still risk losing access to welfare benefits if they save more than $1,000 in their account for their child. This bipartisan legislation would put an end to that practice nationwide, ensuring that families who save for their children aren’t at risk of losing essential public benefits that help them make ends meet. You can read more about the bill here.
CSAs Continue Growing Across the Country
Our goal of connecting 1.4 million children with a Children’s Savings Account (CSA) by 2020 will require big, bold new programs in states and large cities. That’s why we’re excited to see the emergence of several new policy proposals and legislation across the country. It’s clear that opportunities are ripe for expanding publicly-supported CSA program in many states and cities over the next few years.
Here are a few highlights of recent developments:
Colorado: A bipartisan bill is pending in the Colorado legislature to create the Aspire to College program, a three-year pilot CSA program run by the state’s Department of Human Services and targeted towards low-income pre-school children.
Maryland: Democratic legislative leaders have proposed a match of up to $250 per year for families making contributions into the state’s 529 college savings plan. While we would prefer the bill authors lower the annual income cap for the match—currently proposed at $225,000—to ensure that the bulk of the match goes to households of modest means, the idea shows promise.
Baltimore, Maryland: DeRay McKesson, a candidate for Baltimore Mayor and leading activist for Campaign Zero and Black Lives Matter, has called for creation of a CSA program providing an account for every student in Baltimore schools.
Washington State: Representative Christine Kilduff recently proposed a bill in the Washington House to provide a CSA to every child born or adopted in the state. Every child would receive a $250 initial deposit, with low-income children eligible for an additional $250 in match.
The Campaign will continue to support and promote these and other efforts to help more children have the opportunity to build savings for a future that includes postsecondary education.
New Federal Legislation Boosts Children’s Savings
Yesterday, Representative Ben Ray Luján (D-NM), introduced a new bill to reform and expand 529 college savings accounts for low- and moderate-income families, while simultaneously strengthening the single largest tax program for higher education, the American Opportunity Tax Credit (AOTC). Rep. Luján introduced the Save for Success Act with the strong support of several Campaign for Every Kid’s Future partners, including CFED, Center for Social Development, Center on Assets, Education, and Inclusion and “I Have a Dream” Foundation.
Currently upper-income families own 98.9% of all savings in 529s and disproportionately reap associated tax benefits. This legislation aims to reform 529s to bring more benefits to lower-income families. Under the proposal, families would receive a dollar-for-dollar tax credit for saving into a 529 for their children, which would be issued as an advance payment of the AOTC. For example, a household that opens a 529 for their newborn and deposits $100 would be eligible for a $100 advance AOTC tax credit in that year. At the time the child enrolls in college, she would still be eligible for the remaining portion of the $10,000 AOTC lifetime maximum that had not be earned as an advance credit. In short, this bill wouldn’t expand the size of the AOTC. Instead, it would advance the AOTC to support college savings.
The bill also makes thoughtful improvements to strengthen the AOTC to increase the credit’s take-up and impact on higher education success for lower-income families. For more information on the Save for Success Act, visit Prosperity Now's website. If your organization would like to support Rep. Luján’s legislation or discuss it further, please contact Ezra Levin at CFED.
The Start of a “Promising” Model for CSAs in Oakland
Led by Oakland Mayor Libby Schaaf, and launched in January 2016, a new initiative called The Oakland Promise pledges to triple the number of college graduates from Oakland public schools in the next decade. The program has received an overwhelming amount of support from key stakeholders such as every city council and school board member, local college presidents, funders, community organizations and corporate partners. Of the $38 million needed to ramp up the program over the next four years, $25 million has already been committed by foundations, the City of Oakland and the Oakland Unified School District.
The multi-pronged Oakland Promise initiative has two specific CSA components, Brilliant Baby and Kindergarten to College. Brilliant Baby is a two-generation approach to helping low-income families. Every baby born in poverty in Oakland will have a college savings account seeded with $500, and parents in the program will also receive a savings account along with parenting and financial coaching support. Kindergarten to College (K2C) automatically establishes a savings account seeded with $100 for every kindergartner in Oakland public and charter schools. K2C will also provide financial education and additional savings incentives up to $200 for participants. Both components will begin as pilots in fall 2016.
In addition to opening 55,000 college savings accounts in the next ten years, the Oakland Promise, a Campaign for Every Kid’s Future partner, will also provide $100 million in college scholarships for kids in the next ten years. In partnership with the East Bay College Fund, the Oakland Promise will provide college scholarships of $1,000 up to $16,000 for low-income students in Oakland.
The Oakland Promise is an ambitious “cradle-to-college” program model that is certainly one to watch. The program has been covered in SFGate and the San Francisco Chronicle. To read more about the Oakland Promise launch in January from the perspective of CFED’s founder, Bob Friedman, and Director of Children’s Savings, Carl Rist, see their blog post on CFED’s The Inclusive Economy.