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Education IDAs

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Title: Education IDAs


1
Education IDAs
Individual Development Accounts
  • Research Team Adrianna Kezar, Vikki Frank, Jaime
    Lester, Hannah Yang
  • Center for Higher Education Policy Analysis
  • Rossier School of Education
  • University of Southern California
  • http//www.usc.edu/dept/chepa/accounts/

2
Education IDAs
  • Context Over the past two decades, policymakers
    have shifted their financial commitments from
    scholarships to loans.
  • This affects low-income families the most!
  • financial obligations that make loans difficult
    to pay back
  • lack trust in financial institutions and debt
    instruments, especially among first-generation
    Americans
  • no or poor credit histories

3
Education IDAs
  • Educational leaders are concerned that
    low-income families have the least opportunity to
    participate in higher education.
  • Research on college access among low income
    groups demonstrates that while cost is one of the
    greatest barriers, life skills and support are
    also critical.

4
Education IDAs
  • Opportunity
  • Individual Development Accounts (IDAs) represent
    an important underutilized solution to the
    problems of access and financial aid for
    postsecondary education.

5
Education IDAs
  • College is often a lot of financial firsts
  • personal budget
  • student loans
  • student credit card offers

6
Education IDAs
  • IDA matched saving account
  • Example
  • For every 1 you save, receive 2 in matched
    funds
  • Save up to 2,000, earn up to 4,000 in matched
    funds
  • Savings and match can help pay for college!

7
Education IDAs
DO THE MATH
  • 2,000 (student savings)
  • 4,000 (matched funds)
  • 6,000 (total funds)

1,000 (student savings) 4,000 (matche
d funds)
5,000 (total funds)
1,000 (student savings) 8,000 (matche
d funds)
9,000 (total funds)
8
Education IDAs
  • Save in a bank account
  • Complete a financial education course
  • Develop financial skills
  • Learn to establish build credit
  • Create an education plan
  • Spend funds at an educational institution

9
Education IDA An Example
Sara starts saving in December 2006
She saves 100 per month.

June 2006
August 2008
December 2008
December 2006
December 2006
6 months
6 months
8 months
4 months
Sara has saved 600 and earned 1,200. She can
spend up to 1,800 on school.
Sara spends IDA funds every semester for tuition
, fees and books.
Sara begins saving 100 per month
Sara saves 800 and earns 1,600.
Sara saves another 600, earns 1,200 and spends
the 1,800 on semester 2.
Sara earns her degree! She graduates with 6,000
less in student loans and a valuable savings
behavior
10
How can Education IDA Funds be used?
No Room Board Student loans Electronics Ca
r/transportation
Parking
Yes Tuition Fees Books Supplies Equipment

11
Who qualifies? Students family must have
earned income greater than IDA savings less
than program income limits
12
IDAs and FAFSADo IDAs reduce financial aid
packages?
Student always comes out ahead
Savings of savings may impact EFC variable
s Parent savings Dependent student savings Ind
ependent student saving
1040/EZ Eligible
Match No impact on federal state entitlement
grants Private scholarships? Outside resource

Gap Funding Last Dollar In
13
Education IDAs
  • Post Secondary Educational Institutions can use
    IDAs
  • OUTREACH TOOL to attract low-income students to
    their university
  • RETENTION TOOL to encourage low-income students
    to stay in school
  • LEVERAGE PRIVATE SCHOLARSHIP FUNDS for low-income
    students with student savings and IDA match
  • FINANCIAL EDUCATION TOOL to help low-income
    students learn to effectively manage their
    finances, debt and credit

14
Education IDAs
  • Ed IDA Challenges
  • Universities have not been a stakeholder in IDA
    policy discussions and are, on the whole, unaware
    of IDAs
  • Universities are vast multi-faceted bureaucracies
    with multiple points of entry it is difficult to
    identify the appropriate decision makers to
    introduce IDAs
  • IDAs comprise multiple components that cross over
    many university departments

15
Education IDAs
  • Developing University Partners
  • Financial Aid Office
  • Admissions Office
  • Deans Office
  • Student Services/TRIO
  • College/University Foundation
  • Cooperative Extension Service
  • Micro-Enterprise departments

16
IDAs and Financial Education/Literacy
  • How much financial education/literacy activities
    are happening on college campuses or in high
    schools
  • Oklahoma new policy and high school program
  • Talent search and some TRIO
  • Conducting survey of financial education

17
Education IDAs
  • Project Goals
  • Increase IDA use for educational purposes and
    increase post-secondary educational institutional
    involvement with IDAs.
  • 1) understand the role IDAs currently play in
    creating access to college through asset
    development
  • 2) examine the potential for IDA growth with
    respect to increasing access to education for
    low-income students
  • 3) explore challenges and opportunities to the
    growth and expansion of IDAs within the
    post-secondary education sector

18
Education IDAs
  • Project activities
  • Interviews with IDA practitioners that currently
    have educationally-oriented IDA Initiatives aimed
    at understanding current models of post-secondary
    education institution participation
  • Focus groups bringing together leaders in the
    IDA, higher education, and philanthropic
    communities
  • Develop detailed models for expanding University
    IDAs and for overcoming challenges

19
Education IDAs
  • Developing Partnership Models
  • University-Community Partnership
  • University-High School Partnership
  • (Education Trust, TRIO, GEAR UP, Urban Alliance
    and Maya Angelou)
  • University-based IDA
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