Saving for the Future: Parents' Perspectives on Savings Accounts
IABG In The News
October 22, 2012
A new study was released this month by EARN Research Institute about parents’ perspectives on saving for education beyond high school. The study consists of information from telephone surveys asking about parents’ views on issues related to saving for their children’s high education.
The study found that 87% of parents in the United States think that a college degree is important for their children but are concerned about college affordability. Furthermore, although 69% of parents considered saving for their children’s higher education a priority, only 53% of parents have actually started saving. The study also found lack of resources and access to appropriate accounts impact their ability to save. Parents express clear preferences about account features when saving for their children’s education, and mainstream accounts do not currently suit parents’ needs and preferences. Parents are looking for accounts with the following features:
- Deposits are guaranteed not to lose value
- No minimum account balance in required
- Deposits can be made in person or online
- Funds can only be used for college expenses for your child
- Funds can be used for college and pre-college expenses
This study highlights the need for accessible accounts. IABG advocates for, not only universal Children’s Savings Accounts, but for increased access to Illinois’ existing 529 college savings program. The following changes to the 529 Bright Start College Savings Program will expand the program to lower-income families:
- Exclude 529 accounts from all asset tests on public benefits programs
- Create a matched-savings component to their 529 college savings program for lower-income individuals.
- Change the Illinois Income Tax Return to include an opportunity for direct deposit of a parent’s (or other relative’s) tax refund into a child’s 529 college savings account.
- Develop a refundable tax credit based on the contributions to the 529 plan to boost savings for lower-income individuals.
- Promote their 529 college savings program through the Volunteer Tax Assistance Program (VITA) sites.
These changes speak to some of the needs expressed by parents in the EARN study. They will give parents more access to this important savings tool and ensure that there are incentives to save for your child’s future rather than disincentives or barriers.
To learn more about Children’s Savings Accounts and the barriers and solutions to college access, register for the 2012 IABG Conference taking place November 15th & 16th in Champaign, IL. The conference will feature a number of experts in the field of children’s savings accounts, including Margaret Clancy the Policy Director and College Savings Initiative Director at Center for Social Development at Washington University in St. Louis, Min Zhan Associate Professor in the School of Social Work at University of Illinois at Urbana-Champaign, Anee Brar the Program Manager of the Kindergarten to College program at the San Francisco Office of Financial Empowerment, and Tracy Frizzell Executive Director at the Economic Awareness Council.