The college savings movement is growing across the country. Its roots come from the nonprofit asset-building community, which is distinct from the college access and success field. But the two movements share a deep commitment to supporting the same individuals and families from low-income backgrounds to build stronger futures.
By working together, we can ensure that Child or College Savings Account (CSA) programs are well-designed and integrated with the other access strategies proven to increase postsecondary enrollment and completion. An October 2019 report co-written by the National College Attainment Network (NCAN) and Prosperity Now outlines the benefits of such partnerships and provides four case studies of organizations that have already successfully integrated children’s savings with college access services.
Below you’ll find some basics about CSAs and examples of how they are operating in several US communities. For more in-depth information about CSAs, please also visit Prosperity Now's web site.
What is a CSA?
A CSA, or Child Savings Account, is a savings account whose proceeds are designated to pay for a student’s higher education after age 18. These accounts are often created by a state or local government or nonprofit organization and intended to encourage more students to pursue postsecondary education.
Many CSA programs offer savings incentives for families from low-income backgrounds who make their own deposits or engage in activities related to college preparation or financial literacy. Investment growth in the accounts can be tax-free at the federal or state level.
In 2017, CEKF’s annual report found that 382,000 children in 54 programs had a CSA, a 22% increase from 2016. Programs ranged from small, community-based programs serving a few hundred kids to large-scale programs enrolling at least 2,000 children annually. These largest programs enroll the majority of children who have a CSA; the seven large programs accounted for 86% of total CSA enrollment.
Explore Prosperity Now's interactive national map of CSAs to learn more about programs in your area or explore models in other communities.
How Effective are CSAs?
Researchers hypothesize that CSAs can increase the likelihood of a child attending and graduating college because they instill the early belief that postsecondary education is possible, encouraging students to make choices consistent with college preparation throughout their K-12 education. CSAs have been gaining traction as a crucial tool for fostering financial stability and educational attainment among youth in the United States according to a new report from Prosperity Now. The year 2023 marked a significant milestone in the evolution of these programs, highlighting a notable increase in participation, diverse management structures, and a strengthened focus on inclusivity and targeted support.
A 2013 study led by Professor William Elliott, now at the University of Michigan School of Social Work, examined 2009 data from the national Panel Study of Income Dynamics and its supplements, focusing on 512 families with incomes below $50,000 and 345 families with incomes of $50,000 or more. The analysis found that students from families earning below $50,000 but who had from $1 to $499 saved for college were more than four times more likely to attend college than other low-to-moderate income students with no college savings.
CSA Programs that Support Students of Color/from Low-Income Backgrounds
State Programs
All states offer a college savings account, known as a 529 account, that any family can use to save tax-free for college, but just 12 states provide savings matches to encourage families with low-incomes to participate. Louisiana is one of them. Because the state 529 plan is run by the Louisiana Office of Student Financial Assistance, the same agency that manages financial aid for college, college savings information is particularly well-integrated into outreach to low-income families about how to pay for college. Learn more about the Louisiana START Saving Program.
The Virginia529 plan partners with several nonprofit organizations to make account contributions to some low-income high school students as they achieve certain college preparatory milestones. Students can earn up to $2,000 if they maintain a 2.5 GPA, minimize school absences, engage in community service, and complete a FAFSA. Virginia529 collaborates with college access programs and the state community college system to reach students.
In Congress, Senator Bob Casey (D-PA) recently introduced the 401Kids Savings Act, a groundbreaking initiative designed to expand access to CSAs across the nation. This legislation aims to create a comprehensive savings program that mirrors California’s CalKIDS initiative, which has successfully provided children with a financial head start for their higher education.
Last year 2023, Senator Cory Booker (D-NJ) introduced the American Opportunity Accounts Act, which also seeks to establish a national framework for CSAs, ensuring that every child has the opportunity to save for their education. Both pieces of legislation underscore the growing recognition of the importance of early savings in promoting college access and financial stability for families.
Currently, CSAs are available in six states beyond California: Illinois, Maine, Nevada, Nebraska, Pennsylvania, and Rhode Island. These state programs are tailored to encourage families to save for their children’s futures, often providing matching contributions or incentives for families with low-incomes. By creating a culture of saving and equipping families with the necessary resources and financial literacy, these initiatives aim to empower children and bridge the education equity gap.
Nevada’s Silver State Matching Grant Program is open to any family with an adjusted household income of $74,999 or less. Families apply for a matching grant to help build college savings. In 2018, 68% of the matching grant participants had an adjusted gross income of $55,000 or less.
Nonprofit-Based Programs
“I Have A Dream” Foundation affiliates in Colorado, Iowa, and New York (NY) offer a DREAM accounts program that combines matched savings contributions with an evidence-based set of college access milestones and a robust postsecondary financial education curriculum. The DREAM accounts reinforce a college-going culture and provide families with vital information and financial support to help offset the cost of college tuition and supplies. Read more on the NCAN blog about how the program has influenced students on their pathway to college.
In 2022, California created a new program called CalKIDS, the California Kids Investment and Development Program, which helps students from low-income backgrounds save for college or workforce training programs. This program is designed to help families build wealth and put college within reach for all students, regardless of the challenges they have faced in life.All babies born in California on or after July 1, 2022, and all students enrolled in California public schools identified as from low-income backgrounds (based on the local control funding formula) on or after 2021 are eligible to receive up to $1,500 for each child to help put postsecondary education within reach. Newborns receive a one-time deposit of $100, parents who claim the account on the CalKIDS portal receive an additional $25, and parents that link the account to their child’s ScholarShare 529 account receive another $50. Qualifying public school students receive $500 as an automatic benefit. Foster youth and students experiencing homelessness receive an additional $500, for a total of $1,500 available.
For over a decade, an Arizona-based, college-matched savings program called Earn to Learn has been helping low-to middle-income students access a postsecondary education, while directly connecting employers with the trained workforce they require. Here’s how it works: participating students set aside a portion of their own money, up to $500 a year. With those funds, they qualify for up to $4,000 per year in matching scholarship assistance via Earn to Learn – an eight-to-one match. The aid can be applied to any education-related expense – including tuition, fees, books, housing and more. Additionally, the Earn to Learn scholarship can augment other financial assistance the student is receiving, including Pell Grant aid.
Promise Programs
The Oakland Promise is a multidimensional community effort to triple postsecondary attainment for Oakland students. It includes two savings account programs: Brilliant Baby ($500 at birth with additional savings matches available) and Kindergarten to College ($100 for all kindergarten students, with additional matches available).
Since 2015, the El Monte Promise in California has helped 432 students and families from low-income backgrounds save more than $250,000 for college. Free parent workshops in multiple languages at convenient times help families understand that they can in fact afford college for their children and learn the lingo of college admissions and financial aid. This information empowers parents to continue to support their students’ college aspirations.
Other Types of Programs
In 2018, Lancaster ISD became the first district in North Texas to launch Dollars for College, a college savings account program that provides families with low-incomes with a safe, trusted, easy-to-access and low-cost opportunity to start building college savings for their children. Learn more about this school district-based CSA program.
Boston Saves, in Massachusetts, enrolls Boston Public School (BPS) kindergarteners in CSAs automatically. Through Boston Saves, every K2 kindergartner in BPS receives an account with $50 to kickstart their savings for future college or career training. Families can earn additional funds, known as Boston Saves Dollars, and track their savings in the Boston Saves Savings Center. This program helps students and families save and provides valuable resources to help them learn how to effectively manage their money for future planning.
