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US child savings accounts boom to boost access to university – rts.ch

Child savings accounts are increasingly opening in the United States. The goal: to reduce inequality in access to education by encouraging families to save money, while university tuition fees continue to rise.

The Guardian asked him in early April: “Can we change a kid’s life with fifty dollars?” Behind this catchy headline, the British newspaper he asked About the practice of “Children’s Savings Accounts” (CSAs) that thrive in the United States.

According to the 2020 report, there are already about 100 of them in 36 US states. Maine, for example, has offered $500 to each child for several years. And some big cities do that, too.

The City of Los Angeles recently invested millions to open a $50 bank account for more than 40,000 young students. The aim is to encourage families to save money to fund their children’s studies, in a country where the costs of attending university are constantly increasing. According to the site Education dataIt averages 35,000 francs a year, inclusive.

Better prospect of going to college

If $50 isn’t decisive in and of itself, the practice appears to be very effective, according to many experts who study these programs. For Professor William Elliott, a social work researcher at the University of Michigan, social services agencies make it possible to focus financial donations from social policies, family, community, or even student grants, thereby helping them build their savings. “Once every child has an account, a state or city can easily put money into it,” he explains.

According to this specialist in inequality and student debt, these programs have positive effects on children and their families. They encourage parents to plan their children’s studies early. They also have higher expectations.

He notes that “children with an account are more likely to go to university, especially the most disadvantaged children.” “We also found that fathers of children who have accounts are less likely to have parental depression.”

Inspired by behavioral economics

These CSA programs are largely inspired by behavioral economics, which focuses on individual decision-making and aims to induce consumers to “good” economic behaviour. According to these economists, saving is not an instinctive behaviour.

“Savings requires the ability to forgo current consumption for future consumption which is uncertain, unlike your current needs,” explains behavioral economist Mickaël Mangot.

According to him, the act of saving is thus difficult if it is not learned or imposed. This is why it is necessary to help individuals or families put their money aside, for example by giving these savings a “more prominent target”.

No right to education

This type of incentive is used in three-quarters of these programs for children, which also indicates a very liberal conception of the world, emphasizes socio-economic expert Solene Morvant-Roux, associate professor at the University of Geneva who specializes in the financial practices of the population.

“The intent is interesting, and that is to help people help themselves,” she acknowledges. But she doubts that this will put everyone on an equal footing. Especially since the issue of the right to education was never addressed with this type of policy.

at the expense of support networks

In addition, the researcher believes that these calls for bank savings do not take into account savings as for the more popular categories.

“As a salaried people with social rights, we tend to think of savings as banking only. But we have to get out of this simplistic view. Savings can also be made in kind, or by acquiring sustainable goods,” she says.

This can also be done through loans or donations within informal support networks. Solène Morvant-Roux warns networks that could be undermined by the stimulus to bank savings, which also notes that the current accelerating inflation risks eroding the value of the sums saved.

However, this type of program can help give hope in a very unequal American context in terms of access to higher education.

Blandine Levitt / Job

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