Saving Strategy Empowers Parents to Support Students Into College
Thursday, November 1, 2018
Posted by: Jamese Carrell, Member Services Associate
Many college access programs interact primarily with students, but since its launch in 2009, Inversant has focused on parents and families. Founder Bob Hildreth used his finance background to develop a matched savings account program for low-income families of high school students, which is the core of Inversant’s strategy.
To date, Inversant has helped 1,300 families open 1,400 savings accounts worth a total of $2.3 million, or an average of $1,643 per account. More than 580 students with accounts have enrolled in higher education so far, with 83 percent of students entering immediately after high school graduation.
To reach families, Inversant worked closely with selected urban school districts that primarily serve immigrant and low-income families. “We learned that through building partnerships with school districts that not all schools have an existing pool of families that they work with and have a commitment to,” said Yiming Shuang, Inversant chief operating chief officer. “For that reason, partnering with schools that have a commitment and relationship with families is key.”
“We also know that college is a huge financial commitment for families,” said Ms. Shuang. Inversant worked to build trust with families, so that they wouldn’t be perceived as selling a product or a gimmick. Often, families found program incentives “too good to be true,” making the college savings account seem less trustworthy. This made it even more important for Inversant to develop a trusting and strong relationship with families.
Inversant helps each family set up a savings account but then adds a regular program of information, inspiration, and peer support to build their knowledge over a period of years to help them fund their children’s postsecondary education. At monthly Learning Circles, Inversant facilitators coach parents on a full range of college access topics, including standardized testing, higher education options and costs, and the college application process. Families increase their financial literacy so they understand how to minimize the amount they pay for college. Parents form supportive communities where they can learn from one another. Inversant also engages with families virtually through an online portal, video library, e-newsletters, and social media platforms.
Savings Plan Details
Inversant partners with a Massachusetts nonprofit financial cooperative, Metro Credit Union, to host savings accounts. After examining a variety of options, Inversant chose a regular savings account rather than a 529 college savings account because it was much easier for families to open and use. Metro Credit Union is geographically accessible for families, allowing them to make to make in-person cash deposits, and has a reputation for user-friendliness as well as a multilingual staff.
Advantages of Inversant’s savings accounts offered through Metro Credit include:
- Savings match up to $1,000.
- No minimum deposit or balance requirement.
- Parents are account holders.
- No fees associated with accounts for families.
Metro Credit Union also provides Inversant with monthly reports, which make it easier to administer families’ accounts and review balances.
Inversant researched and learned about behavioral economic theory to strengthen the outcomes of its matching incentives. One thing the organizaton learned was that if you desire behavioral change, it’s important not to attach too many strings to one incentive.
Initially, Inversant only made one match payment per year, and families had to take multiple steps to get the match. But this all-or-nothing approach felt punitive and discouraged engagement. So instead, Inversant implemented multiple match opportunities families could participate in. For example, Inversant raffles a match payment among all the families who attend each monthly workshop. If a family attends more than half of workshops offered within the year, they receive a match payment. Or, if a family save six months in a row, the family receives a direct bonus deposit. Inversant also conducted research on matching-dollar incentives and what it found was that the more monthly workshops families attended, the more likely the families are to save.
Two years ago, Inversant helped create a state commission to explore the viability of a statewide college savings program. This has allowed the organization to work with the state treasurer’s office and pilot college savings plans to five additional cities, using Inversant’s program model.
On Oct. 16, the state of Massachusetts announced a universal college savings program, SeedMA Baby, which goes into effect in 2020. Through SeedMA Baby, every baby born or adopted will be eligible for an automatic $50 deposit into a college savings plan. The Hildreth Stewart Charitable Foundation played a key role in the program’s start with a donation of $300,000, enough to fund the first year of the program. Thereafter, the state plans to secure funding through donors and public-private partnerships. During a press conference, Bob Hildreth said that new plan represents “hope for parents, for single moms, knowing that their kid will be safe, that they will have a future."
In 2010, Inversant created the College Compacts program to connect families and students to five colleges that are committed to providing qualified students with scholarship opportunities: Boston University, Bunker Hill Community College, Salem State University, UMass Boston, and UMass Lowell. The goal of these college partnerships is to diversify the colleges’ student population, increase awareness among students and families about their school options, and ensure that students receive comprehensive financial aid packages that reduce financial gaps.
Inversant hopes to connect with other NCAN members to learn their challenges and successes in parent engagement. “We are very open-minded to looking at different ways to work and engage with families,” Ms. Shuang said. Parent engagement through college savings is a challenging effort but effective in empowering families to achieve their children’s college dreams.
(Image courtesy of Inversant)