Child Development Accounts can offer a “financial head start’

Last week, the Census Bureau released new data showing that one in seven Americans, including one out of every five children, are now living in poverty. This week, some one thousand advocates, program directors, community organizers, business owners, policy analysts and researchers are gathering in Washington for CFED’s biannual Assets Learning Conference to discuss emerging ideas for helping children and families achieve economic security and stability.

As part of the conference kick-off, several organizations that are leaders in the asset building field came together yesterday to release a new report, Lessons from SEED, a National Demonstration of Child Development Accounts. The SEED project is a comprehensive initiative, combining policy, practice, and research, designed to explore a national system of savings and asset-building accounts for children and youth. Child Development Accounts, or CDAs, are intended to give children in low-income families a “financial head start” towards economic opportunity by beginning savings from as early as birth. CDAs are generally “seeded” with an initial deposit from public or private funds, after which children and parents are encouraged to contribute to the account, often with the incentive of matching contributions. The accounts provide savings that can later be used as productive investments that provide the pathways to opportunity and security, by paying for college, buying a home, starting a business, or for retirement.

The SEED National Demonstration program studied in the new report is based on the experience of more than 1,171 children of all ages and their families who participated in pioneering CDA pilot programs in 12 states and communities. Oklahoma was represented in the project through a matched college savings program for 75 Cherokee Nation high school students in Tahlequah. In addition, the report explores the SEED for Oklahoma Kids demonstration project, in which 529 College Savings accounts were opened for 1,360 Oklahoma newborn with a $1,000 initial deposit.

The new study found that families of all incomes have saved and built assets for children and youth in SEED. The savings were modest but important – participants contributed an average of $30 per quarter to their accounts over the course of the program. At the end of almost three years, the average total accumulation, including incentives, for SEED participants was $1,500. The report pointed out that if these averages were to be maintained from birth through age 18, with modest investment returns, children would save enough to cover two years of community college tuition and fees at current costs. Savings performance varied based on a number of design features of the individual programs, and the study stresses the need to recognize and overcome various obstacles if low-income families are to become successful savers.

The SEED study concludes:

One of the strongest arguments for children’s savings accounts is their potential to chart a path over time towards economic security. But this is not expected to happen quickly. Asset building is a long-term process. It takes time for potential positive psychological, behavioral, and educational effects associated with account ownership to take hold. This means that strategies to support such outcomes will have to be in place over the long term.

Various effors are underway to build on the SEED project and commit to a long-term strategy of asset building for children and youth. At the national level,  the ASPIRE Act, that would create a “lifetime savings account” at birth for every American child, has been introduced in Congress (see our discussion here). In Oklahoma, a 2006 legislatively-appointed Task Force recommended the creation of 529 college savings accounts for all children in families below the state median household income with an initial public deposit and the opportunity for matching contributions. Bills to implement the report’s recommendations were introduced in the Legislature but never advanced through the process.

As a leader in the field of early childhood education, Oklahoma has recognized the difference that investment in quality learning opportunities at a very young age can make for a child’s lifelong educational and economic prospects. The SEED National Demonstration provides promising evidence that  creating early opportunities for financial savings and investments may have similarly transformative effects.


Former Executive Director David Blatt joined OK Policy in 2008 and served as its Executive Director from 2010 to 2019. He previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers.

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