The U.S. Department of Education today announced that it will further help thousands of disadvantaged students access higher education through investing in college savings accounts. The College Savings Account Research Demonstration Project will commit $8.7 million of federal GEAR UP funds to support college savings accounts for students participating in the GEAR UP program, which is designed to increase the college readiness of low-income middle school and high school students.
The project will provide about 10,000 high school students with savings accounts as well as counseling to develop smart financial habits. In addition, the project will research the impact of savings accounts on college access and success by comparing the outcomes of students receiving savings accounts with a control group, which will allow the project to inform strategies at the federal, state and local level.
"We believe that savings accounts play a key role in helping all students--especially those from low-income families--access and succeed in college," said U.S. Secretary of Education Arne Duncan. "Empowering disadvantaged students with financial resources and skills will enable them to make smart investments in higher education--and we'll gain valuable knowledge about how to best serve these students in the future."
Initial research suggests students with savings accounts are much more likely to enroll in college than students without one. In fall 2010, Duncan joined the chairmen of the FDIC and National Credit Union Administration in a commitment to increase the number of students with savings accounts. The draft notice for the College Savings Account Research Demonstration Project outlines a plan for providing 10,000 ninth-grade students and their parents with college savings accounts, financial incentives to save and targeted financial counseling.
Because many GEAR UP grantees may be more readily able to establish and manage savings accounts for GEAR UP students, the Department is proposing that state GEAR UP grantees that received new awards in FY 2011 or FY 2012 and that are participating in the cohort model would be eligible to apply for the project. Each student will receive $200 in seed funding to start the account, which the state will open automatically. Students will have a chance to earn an extra $10 per month in a dollar-for-dollar savings match program over the next four years, ultimately giving them the opportunity to save more than $1,000 for college. Savings will be available for students to use for educational expenses upon enrolling in an institution of higher education.
For more information on the project, including a copy of the Notice of Proposed Priorities, visit: http://www2.ed.gov/programs/gearup/applicant.html.