Savings & Ownership Caucus

A growing number of studies examine the relationships between children’s savings accounts and their educational and financial outcomes. (Please see the Center for Social Development’s website or read this review article for more information on the studies examining these relationships). Consistently, children who have savings accounts early in life have significantly better educational and financial outcomes compared to children who do not have savings accounts early in life. These findings hold true even after taking into consideration things like academic achievement, household income, and household net worth.

Fred Ssewamala, Associate Professor at Columbia University, YouthSave member, and Global Assets Project Senior Fellow, has received a $3.34M grant for a family-based economic empowerment program for AIDS-orphaned and vulnerable youth (11-14) called, Bridges to the Future.

A growing number of research studies investigate the association between children's savings and their educational outcomes, findings which suggest providing children with savings accounts at an early age may be a way to improve their educational outcomes. A recent press release summarizes these research studies, many of which have been conducted by researchers at the University of Kansas and the Center for Social Development. Research also suggests children’s college-bound identities—whether or not they expect to graduate from college—are also associated with children’s educational outcomes. Along these lines, it may be useful to know whether interventions that combine savings plus college-bound identity are best for improving college attendance. A new study has recently been released on the Center for Social Development's website that addresses this very question. This post summarizes findings from William Elliott and colleagues’ paper, Toward a Children's Savings and College-Bound Identity Intervention for Raising College Attendance Rates. Results are forthcoming in the journal Sociology Mind. 

Former IRS Commissioner Fred Goldberg and Peter Tufano, formerly of Harvard Business School but now Dean of the Saïd Business School at Oxford University, have a terrific op-ed at the New York Times today on the issues around the purchase of paper savings bonds.

The First FDIC-Insured Bank Designed just for Young People Turns 24 Years Old

The research on young people’s savings points to early access to basic financial services to improve young people’s life outcomes, including things like improved financial and educational outcomes. Just to give a few examples, research by William Elliott and colleagues finds that young people who have their own savings accounts are significantly more likely to attend and graduate from college. Some of my own research finds that young people are significantly more likely to continue saving later in life when they have access to savings accounts early in life. Given the apparent importance of young people’s savings for improving their life outcomes, financial institutions have a role to play in including young people in basic financial services.

Michael Gerson has an op-ed in the Post today decrying the way that the debt ceiling debate has crowded out discussion of more important topics, namely the recent Pew Research Center report on rising wealth inequality in the US.

While leveling both barrels at Congress, Mr. Gerson takes time out to say a few kind words about our work:

A bipartisan group of Representatives sent a letter to Secretary Geithner today. The letter shows their concern over Treasury's announced plan to eliminate over-the-counter sales of paper savings bonds. The group is led by Reps. Richard Neal (D-MA) and Jim Gerlach (R-PA) and includes Reps. Petri, Tsongas and Pitts, all Co-Chairs of the Congressional Savings and Ownership Caucus. The key issues with the new policy:

A report released today by the Pew Research Center finds that the Great Recession has worsened an already-widening gap in net worth between Whites, Latinos, and Blacks. Using data from the Survey of Income and Program Participation (SIPP), researchers found that between 2005 and 2009, in percentage terms, “inflation-adjusted median wealth fell by 66% among Hispanic households and 53% among black households, compared with just 16% among white households.”

A lot has been said about homeownership recently, especially the role that homeownership plays in families moving forward (or, las familias se mueven adelante) on the path to economic mobility. Stable and affordable housing, qualities attributed to homeownership, may have significant and positive impacts on young people’s life outcomes. And there is particular interest on the relationship between homeownership and young people’s educational outcomes, like college attendance and graduation. In other words, improving homeownership may give young people and their families greater stability, which can lead to improved educational outcomes and ultimately upward economic mobility.

That's right, the Consumer Financial Protection Bureau is now open for business. It has been in an extended start-up phase since the Dodd-Frank Act passed a year ago, but as of today (July 21st) it is empowered to act on its congressional mandate to provide a "single point of accountability" to make sure that the market for financial products and serivces is fair and transparent. In the long run, this will benefit American consumers and the providers of financial services. Check out their website, read the latest from Elizabeth Warren, and find out more about the nominated inaugural director, Richard Cordray. Happy Birthday, CFPB! Nice logo.