HIGHLIGHTS

• Dedicated college savings accounts can help address equity gaps in education early.
• Many people who wish to save for their children’s education face behavioral barriers to opening accounts, accessing available matches and grants, and contributing regularly.
• Designing effective college savings programs requires understanding and creatively addressing these barriers.

The Challenge

Despite decades of work in the U.S. to close educational achievement gaps, unacceptable disparities persist in who attends and completes college. In particular, students of color are less likely than their white peers to enroll in college and far less likely to graduate. Financial vehicles such as Children’s Savings Accounts (CSAs) and 529 college savings plans present an opportunity for policy makers to help address these equity gaps early. In addition to helping people save money in a tax deferred way, the act of saving itself can help families build a college-bound identity—the sense that college is achievable for their children. 

While there is limited evidence on exactly which elements of college savings programs help build a college-going mindset, insights from behavioral science can help families bridge the gap between having an intention to save and actually opening an account and contributing regularly. We can analyze data to understand who is using these accounts and how they are doing so, conduct qualitative research to understand why participants are or are not saving, and creatively design programs to support those families who stand to gain the most from their use. 

Our Approach

For over a decade, ideas42’s Postsecondary Education team has been working to identify the behavioral barriers impeding student success, and to design and implement interventions to address those challenges. As part of this effort, we—along with ideas42’s Financial Health team—have used insights from behavioral science to research, design, implement, and test interventions aimed specifically at boosting college savings. Among other efforts:

• • • We partnered with San Francisco’s Office of Financial Empowerment to behaviorally redesign outreach materials for all new families in their Kindergarten to College (K2C) savings program, creating a comprehensive Welcome Kit.
    • We also worked with San Francisco’s Office of Financial Empowerment to better understand gaps in engagement and the behavioral barriers facing communities who have been historically left out of education, specifically Black, Hispanic, Native American, and Pacific Islander families in lower-income neighborhoods. This research was summarized in our report Balances and Beyond.
    • We created a revised design for the NYC Kids RISE Save for College Program’s online interface and user experience for participating families.
    • We partnered with the Finance Authority of Maine to identify common behavioral barriers NextGen 529 account owners face when it comes to contributing to their accounts and provided 50+ design recommendations for addressing those challenges. The most high-potential ideas can be found in our Design Guide for Program Administrators.
    • We partnered with the ideas42 Policy Lab to outline the behaviorally informed policy levers available to policy makers and state 529 program administrators to increase access to and uptake of 529 savings plans, especially for those underrepresented in 529 savings plans—including families with low incomes and families of color. 

Takeaway

College savings accounts, designed well, provide an opportunity to start to close educational equity gaps. By using insights from behavioral science to understand what motivates families to save for their children’s education, as well as the challenges that ultimately prevent them from following through on their intentions, we can help policy makers better design savings programs that will be attractive to families, meet their needs, and help them overcome common barriers to engagement and contribution. In so doing, we aim to improve the long-term educational and economic prospects of countless children and their communities.

Follow @ideas42 on Twitter to learn more about our work. Contact us at education@ideas42.org with questions.