May 16, 2014

An Early Foundation for College Success through Child Savings Accounts

An article in The New York Times Magazine this week highlights the difficulties that young people from low-income families sometimes face in pursuing their goals of graduating from a four year college.

According to national statistics, the article states, about a quarter of college freshmen born into the bottom half of the income distribution will manage to collect a bachelor’s degree by age 24, while almost 90 percent of freshmen born into families in the top income quartile will go on to finish their degree.

In New York City, while three quarters of our public school graduates report that they plan to attend a two or four year college or another post-secondary program[i], Census data (in chart below) suggests that only about half of young adults hold an Associate’s degree or higher.[ii]

The New York Times Magazine article showcases efforts at the University of Texas at Austin to help students overcome fear and anxiety, as well as build confidence and recognize their abilities. Bravo to UT Austin for taking this initiative; the lessons learned should inform the approach of colleges both in New York City and across the country. Yet, we also owe it to our young people to make sure that we offer them every opportunity to succeed long before they even apply to college.

 Educational Attainment for Young Adults Ages 25 to 34 in New York City

As part of our Recommendations to Make New York City a Better Place for Every Child, we are advancing savings initiatives specifically targeted to help children and youth have access to college savings platforms and learn the fundamentals of financial literacy.

Efforts across the country have shown that possession of a dedicated college savings account can foster a child’s perception of him or herself as college-bound.[iii] This is because these savings accounts can increase a child’s “future orientation”[iv] and give that child a sense of greater control over his or her own money, as well as the goals for which it may be used.[v]

Research has also demonstrated that a child with even a small amount of savings designated for school before reaching college age (ranging from as little as $1 to $499) is over four and a half times more likely to graduate from college than a child with no savings account.

In New York City, there are high rates of child poverty, large numbers of children with poor educational outcomes, and an increasingly competitive labor market that requires skilled and better educated workers. In light of these conditions, New York City’s children should be given all of the tools needed to prepare for higher education and their eventual careers. It is incumbent upon us to develop and improve connections to college savings platforms.

Stay tuned to CCC in the coming months to learn more about our advocacy in this area and what you can do to help!

Tags
Financial Literacy, Economic Security, Education

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