S$ 50 to change the trajectory of a child’s life? Los Angeles has invested millions of dollars in launching the largest universal child savings program in California in the hope that it can, a potential that experts say is backed by research.
Last week, the city opened more than 40,000 savings accounts in colleges with a balance of $ 50 as part of a plan to have every first-grader in America’s second-largest school district open an account.
Officials have announced a program stemming from a similar experiment in San Francisco as an important step toward “help even the playing field”For students and encourage families to save on higher education. Experts say research has shown that these programs, even with small amounts of cash, can have a profound impact.
In recent decades, college spending has risen sharply – jumping 169% since 1980 – anticipating the solvency of families and generally postponing admission to the university. In California, there are tens of thousands of those seeking higher education homelessness and food security amid the double burden of high tuition and devastating state-wide housing shortages.
Los Angeles said its program will help provide more students with college attendance, citing data that students with college savings accounts between $ 1 and $ 499 are three times more likely to go to university and four times more likely to graduate. Similar programs have yielded promising results, research shows.
CSA (Children’s Savings Accounts) programs have begun to thrive in the U.S. over the past 15 years, said William Elliott, a professor and expert on college savings accounts, college debt and inequality in wealth with the University of Michigan. According to 2020 reportthere are more than 100 children’s savings account programs in 36 states and Washington, D.C., serving nearly 1 million children.
“Part of how it should work theoretically is that it builds that future orientation and thinking about college and that it’s a possible future for itself,” said Terry Friedline. a professor of social work at the University of Michigan who has investigated improving the well-being of low-income households through savings.
The specifics of the programs vary, but states and cities typically provide child savings accounts to children ages from birth to kindergarten or first grade, to which they can add savings and eventually gain access to college. Nevada launched the first nationwide program in the U.S. that created a $ 50 college savings account for every kindergarten student who attends public school. In Maine, every child born after 2013 will automatically receive a $ 500 grant invested in future education expenses, while in Pennsylvania, every child born in 2019 is eligible to receive a $ 100 bill.
There are bills in Los Angeles available for all first graders regardless of income and immigration status. The decision by officials to use Citi accounts allows for the inclusion of undocumented families and others, Elliott said. These programs also create systems that allow third-party donors to more easily contribute, he added.
Funding is intended solely for the cost of post-secondary education, including two-year or four-year colleges, vocational schools, and some trade schools. Funding of $ 50 is provided to each account, and families are encouraged to make regular contributions, which accrue interest over time. Students or parents may require early retirement in the event of a family emergency.
Officials behind the program looked at a similar attempt was made in San Francisco, where the first U.S.-funded universal children’s savings account program was introduced. Since 2011, San Francisco has opened a college savings account with $ 50 per pupil in urban public schools, amounting to nearly 50,000 accounts. During this time, 23% of students put in $ 6.8 million city data.
Studies on similar programs have shown an association between CSA and increased savings for colleges, as well as increased admissions to four-year colleges.
A study of a program in Boston aimed at students in grades 7-10 found that families with bills in four to five years saved about $ 2,000 more than those who did not, and were more likely to set monthly contributions. These findings are impressive for a program that is not very intensive – it started with only $ 50 in the account of each student, – said Paco Martarel, an associate professor at UC Davis.
And the benefits of CSA programs go beyond their monetary value, Elliott said. He drew attention to studies that show a positive impact on children’s social and emotional development, an impact on parenting practices – parents are less likely to use flogging – and even reduce depression in the mother.
“It’s not because they get their hands on it, it’s more important to understand that their children have a better future,” Elliott said, adding that adults who had childhood savings were more likely to build other assets, invest in stocks and buy a house. .
Some critics of such programs argue that the immediate needs of low-income people must be addressed before building future assets for children, a critique that Elliott said is erroneous.
“What assets give you is a tangible hope. It says you have money left that you will one day be able to go to college. This is another hope, ”he said. “No one wants to work every day just to find a way to eat – they want to have a share in their future. That’s what this program in Los Angeles is about: give children tangible hope. “
Such a program could eventually be deployed nationwide. Gavin Newsom, Governor of California, introduced Fr. plan to create savings accounts in colleges for 3.7 million low-income children. This is due to the fact that the cost of attending school in the University of California system continues to rise. Students now pay between $ 35,000 and $ 38,000 a year to attend UC between tuition, transportation and housing.
Amanda Khan Fried, head of the policy and communications department of the San Francisco Treasury and Tax Collector’s Office, also said such programs are not designed to address the college’s accessibility crisis, but they are targeted.
“Families are very aware that the amount you save is not important,” she said LA Times. “This is what you take action; you talk about college with your kids. You show them that you believe in them and that the city believes in them. “
In addition to CSA programs, efforts should be made to create systemic change, said Friedline of the University of Michigan.
“We need to take steps to dismantle systems that exclude and marginalize poor and black and brown families,” she said.