Children’s Savings Accounts 101: What they are and why they’re important

Over the past few years, Children’s Savings Accounts (CSA) programs have been increasing in popularity across Michigan. These initiatives have been proven to strengthen inter-generational financial stability and increase the likelihood that a student will continue education after high school. But what are they, exactly, and how are they helping Michigan students and communities? 

In a nutshell, CSAs provide K-12 students and their families with an opportunity to save for education after high school by automatically enrolling students in interest-bearing savings accounts. Money in the account is set aside for college or career costs after a child graduates high school. Once a child graduates, they can use their CSA savings for college tuition, books, trade school, training, and other costs of education. Additional opportunities like savings matching, prize-linked savings, and free initial deposits incentivize families to start CSAs. 

There are currently 15 CSA initiatives in Michigan, with more than 20,000 students participating statewide. For the first time in Michigan history, Gov. Whitmer’s Feb. 2021 budget proposal included a $2 million appropriation for CSA programs. These programs are more than opportunities for Michigan families to save – they have potential to improve generational wealth, increase financial education and stability, and – in turn – promote economic development in Michigan communities. 

How students enroll in CSAs

If eligible for a CSA program, children can enroll in CSAs as soon as kindergarten. Depending on the area and program, children can automatically get a CSA by simply enrolling in kindergarten or 1st grade. Once a student is enrolled in a CSA, they get a free initial deposit to kickstart their savings.

Benefits of CSAs

CSAs provide an easy, early savings opportunity for families which, in turn, improves a child’s chance at achieving their dreams in the future. As a child’s school performance improves and savings account grows, education after high school is made possible and a great career can be achieved.

Research proves that CSAs are impacting generational wealth across the nation. According to a University of Kansas study, children who save between $1 and $500 for college are three times more likely to enroll in college or trade school and four times more likely to graduate than those without savings.  

How CSAs increase savings

CSAs boost family savings by providing incentives such as: 

  • A first deposit when the account is opened
  • Savings matching from banks or credit unions
  • Bonuses for reaching goals. In some programs, activities like reading and homework completion can add to a student’s account balance.

How to start a CSA program in your community

As more communities participate in CSAs, investors from local and nonprofit organizations will be more likely to contribute to CSAs. The more contributions to CSAs, the better chance children have at future education and lifelong success.

Michigan Children’s Savings Account (CSA) Network is a group of community foundations, nonprofits, and local governments that meet to discuss the future growth and development of CSA programs in Michigan, as well as share knowledge and best practices. Joining the Network is free and meetings are quarterly. For more information about the network, contact Brian Rakovitis via email or at 517.485.3588 ext. 1942.

To learn more about CSA programs and how you can start one in your community, join our second Summer of CEDAM policy education webinar on Monday, July 12 at 3pm EST: “Using Children’s Savings Accounts for Economic Inclusion.” We’ll welcome Bonnie Gettys of the Barry Community Foundation, Rep. Julie Calley, and CEDAM Policy Director Jessica AcMoody to provide both legislative and program angles on how CSA programs work on a community-wide scale across Michigan. Register today.