The child savings account (CSA) movement has been growing steadily for years but launch of a new California program led the number of accounts nationally to triple in 2022, according to Prosperity Now’s annual CSA program survey. Almost five million students in the United States now have CSAs.
A CSA is a savings account that is used to pay for a student’s higher education after they turn 18. These accounts are usually created by a state or local government or nonprofit organization and serve to encourage students to pursue higher education.
Although CSA programs differ in their details, they all provide long-term savings or investment accounts and continue to make contributions into the accounts to help children build savings for the future.
CSA programs reached new communities across the nation including the state of California with the support from the newly launched California Kids Investment and Development Savings Program (CalKIDS) introduced
in 2022. CalKIDS initiated their program with a mega-cohort of babies born after July 1, 2022, as well as California public school students who had been enrolled during the 2021-22 school year as first through twelfth graders. Led by NCAN member
ScholarShare 529, newborns are eligible for a $25 deposit in the program and school-age students are eligible for up to $1,500. With consistent automatic enrollment in the most populous state, CalKIDS takes pride in being the biggest CSA program
for some time now.
Prosperity Now’s 2022 CSA Program Survey provided an overview of findings and multiple trends in the field. One of the biggest highlights from the data includes the total number of children with CSAs by the end of 2022 reaching 4,910,000, which showed
a 300% increase compared to 2021 where the total number was 1,214,000. By the end of 2022, there were a total of 128 programs in operation that included an additional five new programs to both urban and rural communities – Atlanta, GA; Modoc, CA;
and Greenbrier, WV.
The majority (65%) of programs are administered by nonprofit organizations, although those programs tend to be smaller and only make up 8% of children and youth with a CSA. Government agencies at state, county, and municipal level manage about 31% of
programs and the remainder are managed by educational institutions (4%). Due to the enrollment of CalKIDS and other statewide programs, 92% of CSA participants are now enrolled in a program run by a government agency. CalKIDS is the largest program
and showcases how critical state funding is to ensure enrollment at scale, enrolling 3.4 million children across California.
Taking a closer look at participation rates within the programs, the survey highlighted that automatic enrollment enrolls 96% of total participants compared to 4% who are enrolled through self or parent enrollment. While 57% of CSA programs use 529 college
savings accounts and 43% of programs use savings accounts, 97% of participants hold their funds in 529s compared to only 3% of those who hold their funds in savings accounts. According to the survey, more than 850,000 children and youth started their
savings journeys with an initial of $100 or greater, however, a $50 initial deposit was the most common type of program contribution in 2022 (30%) among the 89% of programs that offer the deposit.
Additionally, research found that more than 3.6 million children served by CSA programs are from low- to moderate-income families, or three out of every four participants. Specifically, 41% of CSA programs offer targeted benefits to participants from
low-income families. Lastly, the survey found that the most common goal for CSA programs was to increase the number of young people who complete college or career training, with 51% of programs choosing it as their top goal, and 84% as one of their
top three.
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