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Child savings accounts help families build assets

Child savings account (CSA) programs are being implemented in a number of states and communities around the country. CSAs offer participants the opportunity to save for post-secondary education in dedicated accounts. This includes conventional savings accounts or special tax preferred 529 savings plans. Many programs also offer initial starter deposits and a variety of incentives to help boost the savings accumulated by the families. These programs build on the idea that asset accumulation is important to consumers who are attempting to achieve long-term financial goals. Post-secondary education can lead to higher wages and greater financial capability to pursue those goals.

Consumers with lower incomes and low wealth may get significant benefits from child savings opportunities. Many programs open accounts for participants at birth or at entry to elementary school, allowing families to save for 12-18 years before the child is ready to attend post-secondary education. Research by the Center for Social Development at Washington University in St. Louis shows that starting to save for future education early in a child’s life increases the likelihood that the child will later attend and complete post-secondary education.

About the Bureau’s child savings account initiative

The Bureau provides tools and information to help traditionally underserved consumers become more financially stable and secure. We engaged in a CSA initiative to identify, document, and advance promising and proven practices that can increase child savings opportunities for more families with low incomes and low wealth, and that can be taken to scale. 

About the paper

As part of the first year of this initiative, the Bureau hosted a forum on CSAs in May 2018. Attendees included researchers, child savings program representatives from state and local initiatives, and intermediaries and financial institutions affiliated with CSA programs. 

Today we are releasing a paper summarizing the discussions and key takeaways from that forum. In the paper you will find information on:

  • The development of the child savings field
  • Approaches to engage consumers in child savings opportunities
  • Promising funding strategies for CSA programs
  • The use of incentives to encourage participation
  • Current approaches to measuring the effect of CSAs on children and family financial well-being
  • Next steps in advancing the availability and strength of CSA programs

Learn more in the Bureau’s paper on the child savings account initiative.

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