OKLAHOMA CITY, Okla.–Fourteen years after a research project was launched that offered $1,000 to the families of newborns to open a college savings account in the child’s name, the results are starting to be seen.
The objective of the research was to see whether creating savings accounts for newborns would improve their graduation rates and their chances of going to college or trade school years later, according to the New York Times.
The experiment, called SEED for Oklahoma Kids or SEED OK, is one of a growing number of efforts by cities and states — governed by Democrats and Republicans alike — to help a new generation climb the educational ladder and build assets, the Times noted.
“This study and others aren’t finished, but at a time when the gap between the richest sliver of Americans and everyone else is growing, the results have been encouraging,” the report added.
More ‘Focused’
Research about the Oklahoma project published this month by the Center for Social Development at Washington University in St. Louis, which created SEED OK, found that families that had been given accounts were more college-focused and contributed more of their own money than those that hadn’t been, according to the Times. And the effects are strongest among low-income families.
“The approach breaks with most social policy programs created over the last half-century, which focus on income supplements,” the Times stated. “Child savings accounts, by contrast, concentrate on accumulating assets over the long term.”
Michael Sherraden, the founder of the center at Washington University, told the Times the idea was to give everyone a stake — an investment — in the future. Benefits of the program extend not just to bank accounts but also to behavior.
‘Greater Expectations’
“Households with the seed money — especially poorer ones with parents who did not attend college — have greater expectations about higher education, are more optimistic, have lower rates of depression and save more,” the Times reported.
According to the report, the Oklahoma program is widening that reach. The 1,300-plus children who were chosen at random to be given accounts in 2007 had an average of $3,243 saved by the end of 2019. Among the control group — another 1,300 children who were randomly selected to take part but were not given any money — only 4% had an account, the report found.
Parents of children with accounts were also roughly five times as likely to contribute money as those in the control group.
The ‘Big Thing’
“The big thing is how a stock of assets can change the attitudes of mothers and kids,” Ray Boshara, a senior adviser for the Institute for Economic Equity at the Federal Reserve Bank of St. Louis, told the Times. “College accounts change their attitude about their ability to go to college. A relatively small intervention has potential to change economic outcomes. And it has a bigger impact among people of color.”