Long-Term Benefits of Child Development Accounts and Enduring Challenges to College Attendance for Low-Income Children

Background: First proposed by Sherraden in 1991, Child Development Accounts (CDAs) have developed in various sites around the world. Envisioned as a way to improve child well-being through financial stability, CSAs have been linked to important educational outcomes, including increased college attendance and completion.  Much of the US-specific research on CDAs comes from the policy, practice, and research initiative, Saving for Education, Entrepreneurship, and Downpayment (SEED), which implemented CDAs in 12 sites across the country.

This study is part of a unique qualitative long-term follow-up of pre-school SEED participants from Michigan, who are now entering high school. In order to understand how SEED has impacted caregiver and youth perceptions of and preparation for college, this study explored themes around two key questions: (1) How do caregivers and participants think about the accounts six years after the program has ended? (2) What are the perceived direct and indirect effects of offering a child savings account on academic outcomes and attitudes toward the future?

Methods: The Michigan SEED program was designed as a quasi-experimental comparison of seven treatment and seven control Head Start centers. Caregivers of children at all 14 centers were invited to complete a baseline interview in 2004. A Wave 2 survey was given as the program was coming to an end in 2008. Caregivers with children enrolled in treatment Head Start centers were offered a CDA with an initial $800 deposit, matched by a $200 state deposit, and were also encouraged to take advantage of a 1-to-1 match for additional personal savings, up to maximum of $1,200. This study was a qualitative long-term follow up of those who partook in the Wave 2 survey. Both treatment and control participants were recruited from the list of prior respondents. We located and conducted in-depth semi-structured interviews with 10 treatment participants, 10 control participants, and 2 youths. Interviews were transcribed verbatim and coded thematically by three independent coders.

Findings:  In these interviews we uncovered three thematic findings: (1) Both control and treatment participants have high expectations for their children; (2) most treatment participants were still engaged in the SEED accounts years after the program had ended; and (3) although both treatment and control participants expressed desires to save for their child’s college, the SEED account holders were more specific and concrete about college savings, while the control participants mainly spoke in ideals. Challenges were encountered in recruitment, as a high proportion of the respondents had moved during and after the 2008 recession.

Conclusions/Implications: This study is the first to examine the long-term effects of early-childhood CDAs and the implications of the findings on future CDA design and implementation are many. First, parents in the treatment group have remained engaged in concrete planning for their children’s futures, potentially giving their children an important foundation. Second, all noted the importance of starting to save early and uncertainty about the college application process, thus additional engagement about post-secondary planning may increase the impact of CDA programs.