The Long-Term Impact of Child Savings Accounts: Youth Voices

Background: Envisioned as a way to improve well-being through financial stability, child savings accounts (CSAs) have been linked to important educational outcomes for children. This study was a unique mixed methods long-term follow-up of pre-school Saving for Education, Entrepreneurship, and Downpayment participants from Michigan (MI-SEED), who are now entering high school. To understand how MI-SEED has impacted these children and their future plans, this study analyzed a single broad question: How are families involved in a CSA account planning for the transition to adulthood compared to those who did not have CSA accounts?

Methods: The MI-SEED program was designed as a quasi-experimental comparison of seven treatment and seven control Head Start centers. Caregivers of children at all 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 529 CSA 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, to a maximum of $1,200. The 2014/2015 component was a long-term mixed-method follow up of those who partook in the original study. From the list of baseline respondents, we located and conducted in-depth semi-structured interviews with 50 adults and 29 children (29 treatment families with accounts, 3 treatment families without accounts, and 18 control families). Interviews were transcribed verbatim and coded thematically by four independent coders. In 2015, we obtained 529 college balance information from TIAA-CREF. This information was linked to prior survey responses, and 96% of account holders were linked to the survey database. Youth interviews were analyzed in conjunction with parent interviews.

Findings: Through the youth interview analyses, three major themes were uncovered. First, we found that while having an account was independently important for future educational planning, parental communication about the account made a real difference in the specificity of a child’s future plans. The account-holding and communicating group of families had higher youth self-reported expected years of educational attainment (16.4 years), compared to non-communicating (14.1 years) and non-account holding (15.0 years) families. Second, in analyzing the children’s interviews with their parent’s interviews, we often noted tensions between college aspirations and the need to take concrete steps to get there. Third, we found that many families faced multiple substantial barriers to post-secondary educational attainment including severe economic difficulty in the household and negative peer environments.

Conclusions/Implications: A plurality of child savings account-holding parents we interviewed had future plans for their child savings accounts. All children articulated, to varying degrees, plans for the transition to adulthood. Despite multiple barriers and tensions, children whose parents communicated about the accounts with them had clearer, more specific future educational plans. Our results show that age-specific communication between parents and children about the accounts may help promote the long-term impact of child savings accounts.