States explore Child Development Accounts to promote saving thru 529 plans

By Jill Young Miller
Communications Specialist, Center for Social Development at Washington University in St. Louis

Four states have created statewide Child Development Account (CDA) policies, and a new report describes them in detail with the intent of informing new initiatives in the United States. All four CDAs are built on the state 529 college savings plan.

CDAs are savings or investment accounts for long-term developmental goals, typically postsecondary education. In “Statewide Child Development Account Policies: Key Design Elements,” Center for Social Development (CSD) researchers Margaret Clancy and Sondra Beverly identify 10 key CDA design components, originally modeled by SEED for Oklahoma Kids (SEED OK)—a rigorous research test of social policy. Four design elements are central to addressing inequality:

• Universal eligibility so that children of all economic backgrounds participate;
• Automatic, opt-out enrollment;
• Initial deposits from the CDA sponsor; and
• Subsidies that are progressive.

The four statewide CDAs are in Connecticut (Baby Scholars), Maine (Harold Alfond College Challenge), Nevada (College Kick Start) and Rhode Island (CollegeBoundbaby). CSD’s SEED OK research experiment informed policy design elements of each of the CDAs. Read more.