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ASPIRE Act/KIDS Accounts

Introducing Junior ISAs, the Replacement for UK’s Child Trust Fund

August 5, 2011
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Last week the United Kingdom’s Treasury released details on Junior Individual Savings Accounts (ISAs), which are designed to replace the Child Trust Fund (CTF). The CTF, which was in operation from 2005 to 2010, provided universal savings accounts to all newborns in the U.K. with progressive contributions for eligible account holders. Their replacement, Junior ISAs, will retain little of these same features when they become available on November 1, 2011, calling into question whether their features will benefit children from low-income backgrounds.

Have you heard of the Young Americans Bank?

August 5, 2011
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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 to Congress "You Should Listen to New America."

July 29, 2011

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:

The Great Recession Worsens the Racial Wealth Gap

July 26, 2011
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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.”

Banking on the Future: Building an Infrastructure around Children’s Savings

July 14, 2011
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Two days ago, the NY Times published an op-ed describing how the economic recession has called attention to the U.S.’s general neglect of infrastructure development. The op-ed contends that in recent years, the U.S. has made relatively few investments in infrastructure ranging from transportation to energy and that this has implications for the country’s long-term sustainability and growth. Support is made for S.652 Building and Upgrading Infrastructure for Long-Term Development which would create the American Infrastructure Financing Authority (AIFA), recently proposed into Congress with bipartisan support and intended to spur infrastructure development vital to the country’s future. AIFA would invest private capital into grants and loans for long-term and financially sustainable projects related to infrastructure development. I think the interesting parts of the op-ed, though, are the ideas that infrastructure is a worthy investment for long-term sustainability and growth and that widespread investment in infrastructure could be reminiscent of Roosevelt’s New Deal. And especially how these ideas might relate to children's savings.

Financial Regulators: Economic Inclusion and a Healthy Economy Go Together Like Peas and Carrots

June 30, 2011

Or, such is the distillation of the comments made yesterday at the event "Rebuilding the Road to Financial Stability" (co-sponsored by the Congressional Savings and Ownership Caucus and the Center for Financial Security at the University of Wisconsin-Madison) made by Federal Reserve Governor Sarah Bloom Raskin.

Where will Children get the Money to Save?

June 28, 2011
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A Lesson from the Global Assets Project

A common critique about children’s savings accounts is that children have little of their own money to save. Advocates of children’s savings contend that children are agents, capable of saving and should be offered opportunities to do so; however, critics propose that children’s savings accounts as they stand may reproduce existing asset inequalities because children may benefit when their parents have access to more financial resources. Simply stated, where will children – particularly those whose parents have little financial resources – get the money to save? International children’s savings innovations are answering this question in a variety of ways, such as by advocating for the linkage between CCTs and savings accounts.

Reducing an Unfair Educational Advantage

June 1, 2011
Columbia University's Butler Library

College doesn't have to be for the elite

Recent news suggests that colleges and universities, especially the elite, may not be as good as they could be or ought to be because they cater to students whose families are able to pay. This means that college is largely a ‘pay to play’ game, not necessarily admitting the best and the brightest but rather admitting students whose families can afford college tuition. Students whose families have few financial resources are at a disadvantage and are therefore not equally represented in colleges and universities across the U.S.

What Goes Up…Must Go Up? Rising College Costs Break the Laws of Physics

May 25, 2011
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We know it is happening: the cost of college is going up. A few years ago the NY Times published an article based on a report by the National Center for Public Policy and Higher Education reminding us that college may soon become unaffordable for most in the U.S. This reminder was accompanied by the facts that there was a 439% increase in college tuition between 1982 and 2007 and a 147% increase in median household income during that same time period.

“Surely,” we think to ourselves, “the cost of college cannot continue at this rate. Don’t we believe in things like the laws of physics, which tell us that what goes up, must come down?” Unfortunately, the laws of physics are not applicable here. Inflation is likely to continue, meaning that the cost of college may continue to rise.

Savings Accounts: One Small Step for Young People, One Giant Leap towards College

May 20, 2011

For many young people, college may seem like a desirable yet elusive goal: clearly understood as a step toward economic mobility but believed to be unaffordable and otherwise unattainable. Even young people who expect to go to college–those who are both certain and likely to attend college–do not actually attend after graduating from high school. This gap between expectations and attendance is what has been referred to as wilt–when young people’s developed expectations do not have the opportunity to blossom into college attendance.

William Elliott, PhD, Assistant Professor at the University of Kansas and a Senior Research Fellow here at New America Foundation, coined this term in a recent longitudinal study that examined college attendance for young people who expected to attend college.

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