In November, CFED released an update to the Assets & Opportunity Policy Scorecard, reflecting the policy changes enacted over the past year or so. CFED evaluates all 50 states on 12 different policies, so states can receive 48 points at the maximum. OpportunityTexas is either supporting or coordinating efforts in four of the twelve policies, including: College Savings Incentives, Protection from Predatory Short-Term Loans, Lifting Asset Limits in Public Benefit Programs, and Financial Education in Schools. The scoring ranges from a “very strong” policy (meets all 4 criteria) to “weak” policy (meets no criteria).
In sum, Texas only scored 11 of 48 possible policy points, so obviously we have room for improvement. Notwithstanding the accomplishments of the 82nd Legislature on payday lending, asset limits, college savings, and financial education, Texas scored a “goose egg” on six of the twelve Scorecard policies.
On “College Savings Incentives”, the CFED policy criteria underscore how little has been accomplished at the state level, with only twelve states meeting any of the four college savings policy criteria. All told, the number of college savers earning state-run incentives remains extremely low—only a few thousand students nationwide. All states failed on another key criteria: automatic 529 plan enrollment at birth. Given the current political and budgetary climate, especially given the entitlement and immigration debates, automatic or universal 529 enrollment seems unattainable. Instead of universal enrollment, we are focusing on enrolling economically disadvantaged students and incenting these College Savings Accounts (CSAs) through existing large-scale platforms.
Because OpportunityTexas is working to expand access to college savings and connect better with our K-12 education system, we wanted to provide a timely update on how our Texas college savings platforms are gearing up for large-scale enrollment with savings incentives. In particular, we want to highlight new and emerging opportunities to use our Texas college savings infrastructure to enroll and match economically disadvantaged students at a larger scale:
· Texas Save & Match: Texas is one of a dozen states that explicitly authorizes incentives for state residents, with a focus on lower-income families and economically disadvantaged students.
· Elimination of College Savings Penalty: With the passage of HB 3708, Texas is also one of a handful of states to disregard state 529 assets for key public benefits and state financial aid programs (e.g. TANF, CHIP, Medicaid, TEXAS Grants).
· Texas Match the Promise Foundation: Texas is also poised for college savings success because of our capability to raise private dollars for the Save and Match program through the Texas Match the Promise Foundation, a 501c3 organization developed by the Texas Comptroller. With funds accumulating, education and asset building stakeholders have the opportunity to go large-scale through this centralized platform that could match students’ savings across the state. This statewide platform is well suited to foster contributions from private individuals and foundations geared for students in certain geographic areas.
· Regional College Savings Hubs: With the growing interest in college savings through the RAISE Texas network, including the recent College Savings Forum, several local organizations, including those in Austin, Bryan, San Antonio, Midland, and Dallas, are stepping up to enroll children into college savings accounts to complement their financial coaching and education roles. One emerging pilot program, Child Support For College (CS4C), which is a partnership between RAISE Texas and the Child Support Division of the Texas Attorney General’s Office, seeks to enroll and incent at least 300 students, utilizing three local groups serving as enrollment facilitators and financial counselors with custodial parents receiving lump sum child support payments.
· Smarter Texas: Through recent policy changes and our partnership with the Texas Council on Economic Education on Smarter Texas, an emerging K-12 infrastructure can complement local and statewide college savings efforts. With mandatory K-8 financial education, Texas teachers and students can fuse in-classroom financial education with large-scale college savings facilitation and enrollment. In 2012 through our Innovation and Investment Fund, OpportunityTexas hopes to support a pilot in one school district that connects the Smarter Texas program with college savings account enrollment.
With this plumbing in place and a steady stream of funding for the Save & Match through unclaimed property and the Statewide Employee Charitable Campaign, we need to develop three spigots to take Texas CSA enrollment and incentives to large-scale implementation:
· Private Fundraising: A major obstacle to large-scale CSA implementation continues to be product development, enrollment facilitation, and case management. With a secure statewide fundraising platform, local and regional philanthropy should examine investments in child savings accounts that would benefit students in their respective areas of funding.
· Texas Legislative Appropriations: The Legislature should consider appropriating eligible funds to create a statewide challenge grant that would boost interest and leverage donations from the private sector. One possible funding source could be the newly authorized Texas Financial Education Endowment, to be administered by the Texas Finance Commission.
· Financial Institution Partnership: In our role to promote savings and financial education, OpportunityTexas supports an effort to create a partnership between our state’s 529 plans and a financial institution. One of the barriers to 529 access is clearly the lack of any visible community or storefront presence, such as retail outlet to encourage enrollment and accept deposits. In Sallie Mae’s 2010 report, How America Saves for College, low-income parents are much more likely to use checking accounts when saving for college and also more likely to make manual deposits. Currently, families can only make deposits into our state’s 529 plans online or set up automatic bank drafts. How can parents more easily make deposits locally? How can we leverage the ubiquity of ATM machines to create a crosswalk with our 529 plans to boost participation and deposits?
With your help and some improvements as outlined above, we can begin to bring the Save & Match to a community, school and student near you.