Children’s Savings Accounts Increase Access to Higher Education
January 28th, 2016
Going to college provides an opportunity to increase earnings, build wealth and achieve long-term financial security. However, for many low-income working families the opportunity to send their children to college remains challenging. Children’s Savings Accounts can help make post-secondary education more accessible, particularly for low-income families in the Mid South.
The long-term benefits of educational achievement help to create economic prosperity for individuals and the economy. Unfortunately, the Mid South is among the most financially insecure in the nation and has the worst rates of four-year college degree attainment. Mississippi ranks next to last in four-year college degree attainment (21.1%), while Arkansas and Louisiana have the third and fifth worst rates (21.4% and 22.9%, respectively) in the nation. See Chart. Individuals from low-income families are also less likely to finish college. For example, in Louisiana four-year degrees are 6 times more prevalent among the highest-income households compared to the lowest-income households (43.2% and 6.31%, respectively).
Children’s Savings Accounts, established for children as early as birth and allowed to grow over their lifetime, are a tax-free way to save for college. Research shows that low-income children, with $500 or less saved for college, are 3 times more likely to enroll and 4 times more likely to graduate.
Recently, HOPE partnered with McDonough 42, a school located in the New Orleans 7th Ward, to provide Children’s Savings Accounts, financial education and other services for the children, families and staff of McDonogh 42 as well as the surrounding community. This partnership helps families get an early start in saving for higher education.
With access to higher education still a major barrier for thousands of low-income working families in the Mid South, Children’s Savings Accounts will help these families save for college and make post-secondary education a reality.
Source: Corporation for Enterprise Development. (2016). Assets and Opportunity Scorecard, 2016. Retrieved from http://assetsandopportunity.org/scorecard/