Can $50 change a child’s life? Los Angeles is testing the Universal College Savings Account | American education

VS$50 change the trajectory of a child’s life? Los Angeles invested millions of dollars to launch the largest universal children’s savings program in California with the hope that it can, a potential that experts say is backed by research.

The city last week opened more than 40,000 college savings accounts with balances of $50, part of a plan to give every freshman in the states’ second-largest school district an account. -United.

Officials announced the program, which follows a similar experience in San Francisco, as an important step for “help level the playing fieldprogram for students and encourage families to save for higher education. Experts say research has shown that these programs, even with small amounts of money, can have a profound impact.

College costs have risen dramatically over the past few decades – jump 169% since 1980 – exceeding the ability of families to pay and completely delaying certain university studies. In California, tens of thousands of people seeking post-secondary degrees face roaming and food insecurity amid the double burden of high tuition and a devastating statewide housing shortage.

Los Angeles said its program would help get more students to attend college, citing data that students with college savings accounts of as little as $1 to $499 are three times more likely to attend college. likely to go to college and four times more likely to graduate. Similar programs have shown promising results, according to research.

CSA (children’s savings accounts) programs have taken off in the United States over the past 15 years, said William Elliott, a professor and expert on college savings accounts, college debt and wealth inequality at the University of Michigan. According to a 2020 reportthere are more than 100 children’s savings account programs in 36 states and Washington DC, serving nearly one million children.

“Part of how it’s supposed to work theoretically is that they build that future direction and think about college and that being a possible future for themselves,” said Terri Friedline, professor of social work at the University of Michigan, who has studied the improvement of the well-being of low-income households through savings.

The specifics of the programs vary, but generally involve states and cities granting children’s savings accounts to children between the age of birth and kindergarten or first grade, to which they can add savings and eventually access the university. Nevada launched the first statewide program in the United States, which created a college savings account with $50 for each kindergarten child attending public school. In Maine, every baby born after 2013 will automatically have a $500 grant invested for future education costs while in Pennsylvania, every baby born since 2019 is eligible to receive an account with $100.

In Los Angeles, the accounts are available to all first-year students, regardless of income or immigration status. Officials’ decision to use Citi accounts allows for the inclusion of undocumented families and others, Elliott said. These programs also create systems that make it easier for third-party donors to contribute, he added.

Funding is for post-high school education costs only, including two- and four-year colleges, vocational schools, and some trade schools. Each account comes with $50 funding, and families are encouraged to set up regular contributions, which accrue interest over time. Students or parents can request an early withdrawal in case of a family emergency.

Program Managers looked a similar effort in San Francisco, which introduced the first publicly funded Universal Children’s Savings Account program in the United States. Since 2011, San Francisco has opened a college savings account with $50 for every kindergarten in the city’s public schools, totaling nearly 50,000 accounts. During this period, 23% of students have set aside $6.8 million, according to the city ​​data.

Research on similar programs has shown a correlation between CSAs and increased savings for colleges as well as increased enrollment in four-year colleges.

A study of a program in Boston for students in grades 7 to 10 showed that families with accounts saved about $2,000 more over four to five years than those without, and were more likely to establish monthly contributions. Those results are impressive for a program that isn’t very intensive — this one started with just $50 in each student’s account — said Paco Martorell, an associate professor at the UC Davis School of Education.

And the benefits of CSA programs extend beyond their monetary value, Elliott said. He pointed to research that shows positive effects on children’s social-emotional development, effects on parenting practices – parents are less likely to use spanking – and even a reduction in maternal depression.

“It’s not because they have money in their hands, it’s more to understand that their children have a better future,” Elliott said, adding that adults who had savings when they were children are more likely to create other assets, invest in stocks and buy a house. .

Some critics of these programs argue that the immediate needs of low-income people should be considered before building future assets for children, a criticism Elliott said was wrong.

“What trumps give you is tangible hope. He says you have some money saved that you can use to go to college one day. It’s a different kind of hope,” he said. “Nobody wants to work hard every day just so they can find a way to eat, they want to have a stake in their future – that’s what this Los Angeles program is about… giving kids tangible hope.”

Such a program could eventually be rolled out statewide. Gavin Newsom, Governor of California, presented a plan to create education savings accounts for 3.7 million low-income children. This comes as the cost of attending a school in the University of California system has continued to rise. Students now pay between $35,000 and $38,000 per year for attend one UC between tuition, transportation and accommodation.

Amanda Kahn Fried, chief of policy and communications for the San Francisco Office of the Treasurer and Tax Collector, also said such programs are not meant to solve the college affordability crisis, but are ambitious. .

“It’s very clear to families that the amount you save is not what’s important,” she told the Los Angeles Time. “You are acting; you talk about college with your kids. You show them that you believe in them and that the city believes in them.

Beyond CSA programs, there must be efforts to create systemic change, Friedline said.

“We must take action to dismantle the systems that have excluded and marginalized poor and black and brown families,” she said.

Can $50 change a child’s life? Los Angeles is testing the Universal College Savings Account | American education

Source link Can $50 change a child’s life? Los Angeles is testing the Universal College Savings Account | American education

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