By Louisa Woodhouse, Senior Associate, Policy and Advocacy
Reading time: Three minutes
The federal budget reconciliation legislation enacted in July 2025 included creation of “Trump Accounts” for children to increase savings for education, home
ownership, starting a business, or retirement. These new accounts were top of mind for participants at an October convening centered on accelerating the scale of early wealth-building programs to increase access to postsecondary education hosted by
the Charles Stewart Mott Foundation and the Alfond Scholarship Foundation. Beginning in July of 2026, the federal government will provide a $1,000 seed deposit into Trump
Accounts for children born between 2025–2028. Children under the age of 18 and born prior to 2025 will also be eligible to enroll, though they will not receive a seed grant.
The Trump Accounts program is designed to encourage multiple streams of investments: families will be able to deposit up to $5,000 annually, while employers, nonprofit organizations, and other entities can also contribute to the accounts. All contributions
must be invested in broad stock market index funds and will be accessible to children at age 18. Though Trump Account funds are not restricted for a specific purpose—unlike 529 plans and many Children’s Savings Accounts (CSAs)—individuals will be required to pay higher taxes if funds are spent on items other than a first home, postsecondary education, or other purposes not linked to economic mobility.
Evidence is growing that CSAs are an effective way to encourage more historically underrepresented students to aspire to and enroll in postsecondary education. While the introduction of Trump Accounts signals
federal support for the concept of early wealth building, experts in the field highlighted potential pitfalls in the program’s design. Two key elements missing from the current construction of Trump Accounts include automatic enrollment and a progressive
deposit structure, which would seed a greater amount of funds to those with the fewest financial resources. Many of the most effective CSA programs, including San Francisco’s Kindergarten to College initiative
and My Alfond Grant in Maine, incorporate progressive deposits to ensure that families with fewer assets see financial returns earlier, and that limited resources are effectively targeted. Speakers also
noted that stock market–based programs tend to benefit wealthier households, and that lower-income families, who may not be able to contribute consistently, risk seeing smaller or more volatile gains.
In addition to concerns about program design, panelists elevated the consequences of adding another option to an increasingly crowded landscape of investment opportunities and savings accounts. As the asset-building field has grown, families face a patchwork
of programs, including state and local CSAs, 529 plans, baby bonds, and others, each with their own eligibility rules, tax incentives, and administrative hurdles. Experts cautioned that a new account type could deepen confusion and widen participation
gaps and emphasized that simplification and alignment across programs should be a top advocacy priority: students and families are missing out on the returns they could have if all accounts built assets through a single, streamlined platform. “We
are creating a hodgepodge mess,” one speaker warned.
Many details must be ironed out before Trump Accounts become available in 2026, and experts have offered guidance about how to make the accounts most
effective for families with the greatest needs. Policymakers and practitioners will be watching closely in the months ahead to see how this new approach might help more families build financial security and expand educational opportunities for the
next generation.
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