The impact of COVID-19 will last well beyond 2020 and city leaders are working with local partners to recover in ways that will respond to current and future workforce needs. To this end, many leaders are thinking through how they can change the industries that are operating within their community to be more resilient to future crises. One way that city leaders can increase the likelihood that their decisions will succeed in the long term is by supporting programs that boost the educational attainment of young people through long-term savings vehicles like children’s savings accounts.
In a different time, September would be a month for children to return to school and it would include reminders that it is officially College Savings Month. But this September is different. The world is still dealing with a pandemic and communities are being forced to grapple with and respond to inequities becoming more apparent in their communities. Employment strategies, in particular, rise to the top of many cities’ priority lists, along with the need to build the skills and credentials of people to meet the demands of the new economy.
Children’s savings accounts are long-term savings or investment accounts that provide incentives to help children, especially low-income children, build dedicated savings for postsecondary education. Cities across the county have been able to leverage their working relationships with their banking partners to start and support these programs. City leaders have also worked with their state treasurers to support direct investment into their state’s 529 college savings plan often while leveraging programs that have been created to support investment from low-income families. Other leaders have seen the opportunity with CSAs to complement their or their state’s College Promise Program.
CSA programs have grown across the country at the local and state levels over the last nine years. According to a survey conducted in 2018 more than 457,000 children in 34 states and the District of Columbia have a children’s savings account. This growth can be seen in part by the outcomes from the program’s improved educational expectations for children and their parents, improved academic success, postsecondary enrollment and completion, and increased socioemotional development and psychological well-being for young children.
Even during the pandemic and the financial hardships that have followed, city-run CSA programs are seeing continued family and community support and investment. In San Francisco’s CSA program, Kindergarten to College (K2C), few families have requested emergency withdrawal of their funds, despite a small amount of savings decline. Despite the economic hardships of the pandemic, K2C families are continuing to engage with the program, reinforcing even among low-income families the value of postsecondary education attainment within their community.
As city leaders work to rebuild their communities to better serve residents than before the pandemic, thoughtful planning is necessary to make sure that the results are more equitable. Children’s savings accounts and the impact that they have on the educational attainment of youth from low-income families is one strategy that city leaders should consider as they look to build a workforce that will meet the needs of local industry and allow their communities to thrive.
For more information about the steps you can take to support post-secondary educational attainment through savings click here. For more information about your state’s 529 plan including any support that they might offer to low-income families click here.
About the Author
Patrick Hain is the Program Manager for Economic Opportunity and Financial Empowerment in the NLC Institute for Youth, Education, and Families.