Building Assets and Aspirations with Children’s Savings Account (CSA) Programs

We are often told that education is the great equalizer. But how can that be without the necessary funds to afford it?

Today, a high school diploma is simply not enough to lead Americans to a good job and a decent quality of life. And while having a postsecondary degree or credential is becoming more necessary, the cost of higher education -- from tuition to books, housing, and other fees -- has never been more daunting. As these expectations and costs continue to grow, our country is further dividing into one of the “haves” and “have nots”. In response to this damaging trend, communities across the country have rallied to create incentivized savings initiatives, Children’s Savings Accounts, for their students and families. In partnership with local government, philanthropy, and businesses, communities are working to remove economic barriers to higher education, build community aspirations, and promote financial literacy across generations.

What is a Children’s Savings Account (CSA)?

CSAs are long-term savings or investment accounts for children and youth (ages 0-18), which are built by incentives and contributions from family, friends, and children, and allowed to grow until adulthood. CSAs are:

• Intended for purchasing an asset (usually postsecondary education)

• Provide direct, monetary incentives
 
• Restrict withdrawals from savings for non-asset purposes


*Many CSA programs also allow for a broad range of education uses, not just tuition and fees, but also housing, food, transportation, and other related costs. 

Research shows us that children with even a small amount of educational savings (less than $500) are 3 times more likely to enroll in college and 2.5 times more likely to graduate, than a child with no savings. By building real savings, CSAs can help raise college-going aspirations and cultivate a college-bound mentality among students and their families. Further, while most of these funds are designated for education, these assets may also be used later on to buy a first home or start a small business. 

In addition to seed funding and benchmark incentives that encourage student ambitions, many CSA programs work closely with the local schools to integrate financial literacy curriculum for students, as well as courses for their parents. This multigenerational strategy not only sets students up for financial success but works with their parents to improve their relationship with money. CSA programs help parents navigate their personal finances by bridging connections to the local banks, advisors and financial literacy courses.

Community savings initiatives, like CSAs, offer local economically disadvantaged families a clear entry point into the financial system. And while many of these accounts start small, their sheer existence can ignite important family conversations about finances, college planning, and career goals. By shaping expectations and achievements, CSAs can be used as a gateway to education and hopefully, economic mobility.