Moving Toward a Policy Agenda for Improving Children's Savings Account Delivery Systems Moving Toward a Policy Agenda for Improving Children's Savings Account Delivery Systems

By William Elliott III, Melinda K. Lewis, Anthony S Poore, and Brian Clarke

Research suggests that Children's Savings Accounts (CSAs) may be capable of charting improved opportunities for children's success through the mechanisms of account ownership and transformative asset accumulation. Fueled in large part by evidence of significant effects on children's educational attainment and economic well-being, the CSA field has experienced rapid growth, with programs and policies proliferating around the country. The accounts that form the core intervention within these CSA initiatives are delivered through two principal delivery systems: traditional depository institutions (banks and credit unions), relied on primarily by local and community-based efforts, and state-sponsored 529 college saving plans, the vehicle of choice for most state-level CSAs. At this point in the CSA trajectory, individual programs and the field as a whole face critical questions about the best ways to build CSAs, in order to maximize their potential for potent effects while facilitating sustainable replication.

This paper, jointly produced by the Center on Assets, Education, and Inclusion (AEDI) at the University of Kansas and the Federal Reserve Bank of Boston, was informed by a roundtable on CSA delivery systems, held at the Boston Fed in December 2014. It describes the design, key features, and respective challenges of each principal delivery system. Assessed in light of the CSA field's guiding principles for delivery system design (universal and automatic enrollment, national footprint, cultivation of a saver identity, asset-building, administrative efficiency, and adequate consumer protection), these models have distinct advantages and limitations. This paper attempts to contribute to the critical task of building the knowledge base needed to help children's savings programs begin to weigh the pros and cons of each of these existing delivery systems.