What are CDAs? They’re investment accounts for long-term goals like postsecondary education. They are progressive, seeded with an initial deposit of $50 to $500, with extra put in for the poorest children. And they’re universal, meaning every child is included. Children, parents and others can contribute to the accounts.
“There are many benefits,” Michael Sherraden and Jason Q. Purnell write in a St. Louis Post-Dispatch editorial this week, “Why child development accounts are smart.”
“With interest and new savings, these accounts grow over time,” they explain. “Companies and governments can set up savings matches and other incentives. For children and their families, the accounts are learning opportunities. All participants have a stake in good financial management.”
Sherraden is a professor at Washington University in St. Louis and founding director of the Brown School’s Center for Social Development (CSD). Purnell is an assistant professor at the Brown School and a leader of “For the Sake of All,” a multidisciplinary study on the health and well-being of African-Americans in St. Louis.
They note that the first universal, statewide CDA program in the nation, the Harold Alfond College Challenge in Maine, automatically deposits $500 for every newborn. Some 40,000 Maine children have received an account. In Nevada, the College Kick Start program opened accounts with $50 for about 70,000 public school kindergarten students. And, last year, Connecticut enacted legislation offering an initial deposit in CDAs for resident children.
“Do these initiatives work? In the SEED for Oklahoma Kids experiment, the Center for Social Development at Washington University in St. Louis created a rigorous test of universal child development accounts to find out. In SEED OK, children were randomly assigned to receive an account or not,” Sherraden and Purnell write.
“Findings reveal positive outcomes. For example, having a CDA with assets improves mothers’ mental health, raises mothers’ educational expectations for their children, and even boosts child development.”
This CSD research brief, “The Early Positive Impacts of Child Development Accounts,” highlights more research findings.
“These initiatives work,” Sherraden and Purnell write. “Child development accounts help build stable families and communities, where every resident, including the very poorest and the very youngest, and completely regardless of race or ethnicity, has a stake in the future.”
To read the commission’s full report, click on the title: “Forward Through Ferguson: A Path Toward Racial Equity.”