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CSAs and College Scholarships: The Beginning of a Beautiful Friendship

As Sara Goldrick-Rab describes in her new book, Paying the Price: College Costs, Financial Aid, and the Betrayal of the American Dream, the inability to afford college is a significant reason for low rates of college completion for students from low-income families. In fact, less than 10% of students from low-income households complete college by their mid-20s. Given this strong connection between financial resources and college completion, I was excited to attend the annual conference of the National Scholarship Providers Association (NSPA) earlier this month. NSPA’s 370+ member organizations from the United States, Canada and the Bahamas give over 350,000 scholarships amounting to over a billion dollars each year, helping thousands of students – many of them low-income – pay for college and achieve college success.

As someone with both feet planted firmly in the Children’s Savings Account (CSA) world, it was especially rewarding to see and learn at the NSPA conference about a growing interest on the part of scholarship providers in understanding and integrating college savings into their existing work to help students meet the financial demands of going to college. Dr. William Elliott, Director of the Center on Assets, Education and Inclusion (AEDI), and I were at the conference to talk, in particular, about the potential for collaboration between CSA programs and College Promise Campaigns or Promise Programs (which typically extend a “promise” to elementary or secondary students in a particular community of either scholarships or free tuition to cover all or part of postsecondary tuition costs).

We were already aware of a couple of early-stage innovators in the world of higher education access who had previously begun to integrate matched college saving accounts and college scholarship models. This includes the Scholarship Foundation of St. Louis, which provided almost $5 million in no-interest loans and direct grants to students last year and also opened Missouri 529 accounts with a $500 initial deposit and an offer of additional savings matches to two cohorts of 8th graders at a St. Louis middle school. Another innovator is Earn to Learn, a model effort in Arizona that uses institutional aid from three higher education institutions in Arizona and federal Assets for Independence (AFI) funds to match the savings of low-income high school and college students. Over 1,000 Earn to Learn participants have taken advantage of the program’s generous 8:1 match and have saved over $700,000, which in turn has helped these students earn over $5.6 million in matched savings scholarships.

While at the NSPA conference, we learned about two more promising efforts that combine CSAs with scholarships:

  • Forman Scholars. The Forman S. Acton Educational Foundation, launched in fall 2014, promotes educational opportunities for youth in Salem City, NJ. The Forman Scholars, who must attend Salem City High School and meet specific academic and financial need requirements, can receive between $10,000 and $40,000 in scholarships over their college careers. In addition, through a new initiative known as the Acorn Fund, the Acton Foundation will invest in college savings accounts for every child in Salem.
  • KC Scholars. The Ewing Marion Kauffman Foundation recently announced the new KC Scholars program, which is designed to increase postsecondary educational attainment in the greater Kansas City area. As part of KC Scholars, 250 scholarship awards will be made annually to students in the 11th grade, with a commitment of up to $10,000 per year, renewable for up to five years. In addition, 1,000 9th graders will be chosen annually to participate in a college savings effort that will provide a $25 initial deposit in a 529 College Savings Plan. In each class of savers, fifty students will be selected to receive a 4:1 savings match (up to $5,000) with an additional $2,000 in potential incentives for students who achieve college-readiness milestones.

All of these models demonstrate the unique power and potential of combining CSAs and college scholarship programs. As we concluded in the paper on CSAs and College Promise programs that CFED co-authored with Dr. Elliott, CSA savers need a “promise” or scholarship in addition to the modest savings CSAs provide to help cover the cost of college attendance. At the same time, College Promise and other scholarship programs need CSAs to fully engage the aspirations of all students, not just those that already expect to go to college.