Children's savings accounts

Children’s savings accounts (CSAs), also called children’s development accounts (CDAs), are accounts designated for a specific child to build assets over time through contributions from family, friends, or the child. Accounts are generally started with an initial contribution, or seed money, from a sponsoring organization such as a government agency, nonprofit, or philanthropic foundation. Sponsoring organizations may also provide ongoing savings incentives (e.g., matching contributions) for participants from low income families, along with age-appropriate financial education for the family and child. CSAs are often available through school-based initiatives, citywide public-private partnerships, or statewide efforts. Current statewide initiatives invest in state 529 college savings plans (PN-CSAs).

Expected Beneficial Outcomes (Rated)

  • Increased asset accumulation

  • Increased college enrollment

Other Potential Beneficial Outcomes

  • Increased financial resources for higher education

  • Improved social emotional skills

  • Improved parental mental health

  • Improved financial literacy

Evidence of Effectiveness

Children’s savings accounts (CSAs) are a suggested strategy to expand financial and educational opportunity for children from low income families or disadvantaged backgrounds (PN-CSAs). Evaluations of SEED for Oklahoma Kids (SEED OK), a CSA intervention that included $1000 seed money and savings matches for lower income families, indicates that universal CSAs can nearly eliminate disparities in 529 account and asset holding among groups of different socio-economic status (, ) and between racial and ethnic groups. However, more advantaged children continue to have more assets () and parents with the greatest financial knowledge save more than parents with lower financial literacy ().

Participation in a CSA intervention such as SEED OK can improve social emotional development in early childhood (), particularly for children whose mothers are unmarried (). Participation may also positively affect mothers’ mental health (), increase parents’ financial literacy (), and increase parents’ educational expectations for their children (). Additional evidence is needed to confirm effects of CSA interventions.

Overall, family assets and children’s savings appear to increase college attendance and completion (, , , , , , ). Children and young adults with savings accounts, particularly accounts designated for schooling, are more likely to enroll and graduate from college than those without such accounts. Even school savings accounts holding less than $500 may increase college enrollment and graduation among low and moderate income children (), particularly black children ().

Longer term, holding savings accounts in adolescence appears to be associated with an increased likelihood of savings account ownership, greater total savings (, , ), and greater asset accumulation for young adults, particularly those with low incomes (, ).

Impact on Disparities

Likely to decrease disparities

Implementation Examples

There are currently a variety of CSA programs in the US. Municipally-sponsored initiatives include San Francisco’s Kindergarten to College (K2C) savings account program and St. Louis’s College Kids, which both deposit $50 in an account for every kindergartener in the city. Maine’s Harold Alfond College Challenge opens a NextGen 529 with a $500 deposit for every baby born in the state. Youngstown, Ohio’s I Can Save program is an example of a nonprofit effort funded by foundations and businesses, and the Kansas Child Support Savings Initiative, which allows noncustodial parents to open a 529 for their children and receive a reduction in child support arrears based on those deposits, is a joint effort between the Kansas Department for Children and Families, Child Support Services Office, and the Kansas State Treasurer (PN-CSAs).

In other industrialized countries, CSAs focus on low income or disadvantaged children more explicitly. Programs typically provide seed money for accounts and matching funds for further deposits, and have requirements for school attendance and high school graduation ().

Implementation Resources

AEI-KU 2013 - Assets & Education Initiative (AEI). Building expectation, delivering results: Asset-based financial aid and the future of higher education. Lawrence: The Assets and Education Initiative, University of Kansas School of Social Welfare; 2013.

PN-CSAs - Prosperty Now (PN). Children's saving accounts (CSAs).

Citations - Evidence

* Journal subscription may be required for access.

PN-CSAs - Prosperty Now (PN). Children's saving accounts (CSAs).

Elliott 2013a* - Elliott W, Constance-Huggins M, Song HA. Improving college progress among low- to moderate-income (LMI) young adults: The role of assets. Journal of Family and Economic Issues. 2013;34(4):382-399.

Elliott 2013b* - Elliott W, Song H, Nam I. Small-dollar accounts, children's college outcomes, and wilt. Children and Youth Services Review. 2013;35(3):535-547.

Elliott 2013c* - Elliott W, Song H, Nam I. Small-dollar children's saving accounts and children's college outcomes by income level. Children and Youth Services Review. 2013;35(3):548-559.

Elliott 2011* - Elliott W, Destin M, Friedline T. Taking stock of ten years of research on the relationship between assets and children's educational outcomes: Implications for theory, policy and intervention. Children and Youth Services Review. 2011;33(11):2312-2328.

Friedline 2013* - Friedline T, Elliott W. Connections with banking institutions and diverse asset portfolios in young adulthood: Children as potential future investors. Children and Youth Services Review. 2013;35(6):994-1006.

Friedline 2013a* - Friedline T, Elliott W, Nam I. Small-dollar children's saving accounts and children's college outcomes by race. Children and Youth Services Review. 2013;35(3):548-559.

Friedline 2013b* - Friedline T, Song HA. Accumulating assets, debts in young adulthood: Children as potential future investors. Children and Youth Services Review. 2013;35(9):1486-1502.

Friedline 2012* - Friedline T, Elliott W, Chowa GAN. Testing an asset-building approach for young people: Early access to savings predicts later savings. Economics of Education Review. 2012;33:31-51.

Huang 2010* - Huang J, Guo B, Kim Y, Sherraden M. (2010). Parental income, assets, borrowing constraints and children's post-secondary education. Children and Youth Services Review. 2010;32(4):585-594.

Huang 2014* - Huang J, Sherraden M, Kim Y, Clancy M. Effects of Child Development Accounts on early social-emotional development: An experimental test. JAMA Pediatrics. 2014;168(3):265-271.

Huang 2014a* - Huang J, Sherraden M, Purnell JQ. Impacts of Child Development Accounts on maternal depressive symptoms: Evidence from a randomized statewide policy experiment. Social Science and Medicine. 2014;112:30-38.

Zhan 2011* - Zhan M, Sherraden M. Assets and liabilities, educational expectations, and children's college degree attainment. Children and Youth Services Review. 2011;33(6):846-854.

Kim 2016* - Kim K, Choi JS, Choi E, et al. Effects of community-based health worker interventions to improve chronic disease management and care among vulnerable populations: A systematic review. American Journal of Public Health. 2016;106(4):e3-e28.

Sherraden 2016* - Sherraden M, Clancy M, Nam Y, et al. Universal and progressive Child Development Accounts: A policy innovation to reduce educational disparity. Urban Education. 2016:1-28.

Huang 2015b* - Huang J, Nam Y, Sherraden M, Clancy M. Financial capability and asset accumulation for children’s education: Evidence from an experiment of Child Development Accounts. The Journal of Consumer Affairs. 2015;49(1):127-155.

Huang 2017* - Huang J, Kim Y, Sherraden M, Clancy M. Unmarried mothers and children’s social-emotional development: The role of Child Development Accounts. Journal of Child and Family Studies. 2017;26(1):234-247.

Huang 2017a* - Huang J, Kim Y, Sherraden M, Clancy M. Heterogeneous effects of Child Development Accounts on savings for children’s education. Journal of Policy Practice. 2017;16(1):59-80.

Citations - Implementation Examples

* Journal subscription may be required for access.

PN-CSAs - Prosperty Now (PN). Children's saving accounts (CSAs).

Cheung 2012a* - Cheung M, Delavega E. Child savings accounts: Learning from poverty reduction policies in the world. International Social Work. 2012;55(1):71-94.

Date Last Updated

May 30, 2017