New America on Ownership and Assets

529s are tax-advantaged accounts designed to help families save for post-secondary education.  In recent years, state policymakers and 529 administrators have worked to expand access to 529 plans and increase the participation of lower-income families through outreach, advertising, and targeted incentives such as matching deposits and reducing or eliminating fees.[1]  Yet, as plan administrators and state and federal policymakers design new strategies for expanding the use of 529 plans

At a time when low-income students are underrepresented in higher education and the cost of attendance is becoming increasingly unaffordable, 529 college savings plans have the potential to address issues of college readiness, access and completion.  Savings can help reduce higher education debt, making college more affordable, and has the potential to change aspirations and behaviors of both students and their parents. Research from the asset building field shows that even a relatively small amount of savings may have positive impacts on behavior and educational achievement.

AutoSave is a unique savings plan that automatically diverts through payroll deduction a small amount of post-tax wages into an individual savings account. This new infrastructure nearly seamlessly enables individuals to contribute small amounts of their wages into an accessible, non tax-advantaged savings account. It will be especially valuable for individuals who have limited liquid assets, and who may otherwise be forced to meet emergency needs with high-cost emergency loans.

Earlier this year, the Obama Administration released a bold new plan for improving the state of higher education in the United States. Its fiscal year 2010 budget proposal included several items aimed at increasing postsecondary education enrollment and completion rates, and decreasing the financial burden that college represents to many lower and middle class families. [1] These proposals include reforming the federal student loan program, expanding Pell Grants for low-income students, and creating a new College Access and

There are 40 million persons living in the U.S. who lack a bank account. Many of these "unbanked" individuals lack sufficient identification necessary to meet banks' customer identification verification procedures, which are required by the Bank Secrecy (BSA) and USA PATRIOT Acts. Research shows that insufficient identification is one of the top three reasons for account denial and that customers who are denied a bank account once often do not return to a bank again.

The Passageway Account Proposal

Asset ownership is seen as having an increasingly influential link to a variety of social outcomes. While the UK has experienced increases in economic wealth and improvements in overall living standards over the past 40 years, trends in asset ownership have reversed. More recently, 15 years of economic stability led to a feeling of increased financial security and individual savings were eroded in a boom of consumerism. The distribution of this increase in wealth has been unequal… more

Asset ownership plays a central role in the economic security of American families and the broader economy. Assets can be deployed productively, such as to pay for a college education, or tapped to help individuals and families weather unexpected events. Additionally, assets have behavioral effects that can change the manner in which people think about and plan for the future.

What does the bill do? Why is a bill to promote asset building for children necessary? Who is eligible? Will illegal immigrants or children who become citizens get accounts? Will children born before the bill takes effect get accounts? Why do wealthy people get these accounts? Why do poor people who don't pay taxes get accounts? Is it unrealistic to expect those with low incomes to save when they already struggle to get by? How

To promote local economic development, California policymakers should create Banking Development Districts, a proven way to connect lower-income unbanked Californians with the financial products and services they need to enter the financial mainstream and begin to build savings and assets. It is modeled after New York State's successful Banking Development District program.

For the full text of the issue brief, please see the PDF attached below.

What is the Saver's Bonus?

The Saver’s Bonus is a policy proposal that would reward low- and moderate-income individuals and families who save at tax time. Every dollar deposited in a designated savings product would be matched with an additional dollar from the federal government, up to a $500 annual maximum. Participants would make or report contributions to an eligible account on their federal income tax return, and the bonus would then be transferred directly to the designated account. The… more

The California Employee Savings Program creates a voluntary, universal, portable retirement account for California workers who do not have access to a workplace retirement savings plan. It would give six million California workers and their families an opportunity to have their own workplace retirement savings plans to supplement their basic Social Security benefits. The California Employee Savings Program would also give hundreds of thousands of California small businesses an easy, low-cost, voluntary way to offer a retirement savings plan to their

The CA Workforce Mobility and Savings Initiative, reforms the asset limit in the California Work Opportunity and Responsibility to Kids (CalWORKs) program, to encourage low-income families to build the savings they need to permanently exit welfare. The measure repeals the $2,000 asset limit in CalWORKs for current recipients and raises it for new applicants from $2,000 to $7,000 while also eliminating the $4,650 vehicle limit. By reforming the asset limit, this measure restores the stated goal of the CalWORKs program by assisting families in achieving

Overview

The current economic downturn, triggered in part by excessive household debt and deflating housing prices, underscores the central role asset ownership plays in the economic security of California families and the broader economy.  Yet, half of all Americans currently have few or no assets, in part due to policies that encourage savings and wealth accumulation that benefit the upper half of earners.  The purpose of New America's Asset Building Program, is to significantly broaden savings and assets ownership in America,

Title of the Bill

The America Saving for Personal Investment, Retirement, and Education Act of 2009 ("The ASPIRE Act of 2009")

Purpose of the Bill 

To encourage savings, promote financial literacy, and expand opportunities for young adults by establishing a Lifetime Savings Account for every newborn child.

Lifetime Savings Accounts

The Potential of 529 College Savings Plans

At a time when low-income students are underrepresented in higher education and the cost of attendance is becoming increasingly unaffordable, 529s have the potential to address issues of college readiness, access and completion.  College savings can help make higher education more affordable, and have the potential to change aspirations and behaviors of both students and their parents.  Research from the asset building field has shown that even a relatively

Over the past two decades, policymakers, academics, and others have pursued an array of policies and strategies to help lower and middle income households build savings and assets and access reasonably-priced financial products at mainstream institutions. While some progress has been made, there have been few advances in delivering a high-value, affordable financial product at scale.

When President Clinton signed the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, he changed the moral debate over poverty. No longer could Ronald Reagan's heirs wave help-wanted ads and ask sarcastically why those welfare queens couldn't find a job when there were so many to be had. Now everyone was working, training for a job, or looking for one. It was the law, after all. With benefits now linked to work, progressive politicians could have argued for a… more

ABSTRACT: This policy brief makes the case for linking conditional cash transfers to savings as a two-pronged poverty reduction strategy of supplementing income and building productive assets, while increasing effective financial inclusion of a given population. While conditional cash transfer (CCT) programs and policies have proven effective in achieving certain poverty alleviation goals, such as better health and education, only recently have we begun to explore the potential of CCTs to enhance economic inclusion and poverty reduction through wealth accumulation.

Over the past two decades, policymakers, academics, and others have pursued an array of policies and strategies to help lower and middle income households[i] to build savings and assets and access reasonably-priced financial products at mainstream institutions.  While some progress has been made, there have been few advances to delivering a high-value, affordable financial product at scale.

In recent years, policymakers around the world have been attracted to the concept of integrating a consideration of assets into policy efforts aimed at securing and enhancing social welfare. The theory behind asset-based welfare policy suggests that while income facilitates immediate consumption, social development over the long-term occurs primarily through asset accumulation and investment (Sherraden, 1988, 1991). Assets may not only provide individuals with the ability to exert control over resources that can increase their financial security, they might also… more