The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include children's savings accounts, education, and financial services.
Children’s Savings Accounts
Senator Ron Wyden’s announcement late last week of his interest in universal children’s savings accounts energized the asset-building field. His support for the concept is key, given his approaching ascension to the chairmanship of the Senate’s tax-writing committee, which will give him the prerogative to set the agenda surrounding tax reform. It was a welcome surprise for universal children’s savings accounts to be included among his top priorities, especially because of all the other pressing issues with the current tax code, which Wyden graphically described as a “dysfunctional, rotten mess of a carcass.” Howard Gleckman, writing for TaxVox, the Tax Policy Center blog, identified some the solutions offered by Wyden to address them: revise unequal saving incentives, enhance the Child Tax Credit and the Earned Income Tax Credit, narrow the gap between taxation of investment income and ordinary income, and so on. Writing for New America’s online magazine The Weekly Wonk, Justin King described one way Wyden could achieve his goal of universal children’s savings accounts: the ASPIRE Act.
Senator Wyden isn’t the only policymaker moving to promote children’s savings accounts. In his State of the State address, Connecticut Governor Dan Malloy announced his intention to create a universal system of college savings accounts for young children in the state.
Other state and local leaders with a track record of supporting and implementing children’s savings accounts appeared at a meeting of the federal government’s Financial Literacy and Education Commission (FLEC). Jose Cisneros, Treasurer of the City and County of San Francisco gave information on the City’s Kindergarten to College program; Kate Marshall, Treasurer of the State of the Nevada detailed her plans to provide college savings accounts to all children in Nevada through the Nevada College Kick Start program, and; Eileen Klein of the Arizona Board of Regents highlighted the state’s nascent Earn to Learn program, that leverages federal Assets for Independence funds to boost college savings.
Education
As Hope Yen reported for the Huffington Post, “The earnings gap between young adults with and without bachelor's degrees has stretched to its widest level in nearly half a century.” But even as a college degree becomes an ever more important qualification for succeeding in today’s economy, access to a degree remains unequal. A new video by MDRC describes how many low-income, college-ready students are “undermatching” in their college selection. They enroll in colleges “for which they are academically overqualified” or are “not going to college at all.” One explanation could be rising costs for a college education at the same time as diminishing numbers of need-based aid packages. Stephen Burd of New America’s Education Policy Program describes how public universities, like the University of Virginia, are feeling the pressure of the so-called "merit aid arms race,” which leads them to adopt more restrictive enrollment practices that disproportionately affect low-income applicants. If need-based aid from the school isn’t an option, one would think that federal student aid would remain on the table for needy families. But as Liz Weston revealed this week, filling out a FAFSA form that shows a low income actually hurts applicants’ chances for being admitted. Finally, New America’s Josh Freedman described in Forbes how, even after students are admitted to a college, the nation’s over-reliance on student loans puts students in tenuous financial positions. Loans are, he says, “the worst way to fund college.”
Financial Services
Shaila Dewan described an interesting finding in her article for the New York Times Magazine. We tend to think of credit card debt as exclusively a bad thing, especially for low-income families, but in certain controlled circumstances, “credit card debt can help the poor.” The key is to allow low-income families to build credit through repayment of the debt, as overseen by an organization like the Local Initiatives Support Corporation, the director of which Dewan interviewed for her article. Making loans affordable for low-income people is still important, though, and postal banking, according to David Lazarus for the Los Angeles Times, is a good solution. Such an option isn’t unprecendented, of course: we had postal banking in the U.S. during the first half of the twentieth century, and indeed Nish Acharya argues in Forbes that the U.S. government actually has a pretty good track record in terms of “driving innovation in financial services.” He identifies myRA and postal banking as two such examples. Finally, Jacob Gershman for the Wall Street Journal told of a bizarre string of events that led to a "Kafkaesque black hole of credit unworthiness" for one woman seeking a mortgage in the private market.
Quick Hits
A new retirement fund has been proposed for residents in Connecticut, continuing the pattern of state action on retirement shortcomings that began with California’s Secure Choice effort.
As part of their Assets and Opportunity Scorecard, CFED has released an infographic that details “Who are the Liquid Asset Poor?” The results may surprise you.
D.C. was the only major city in the country to see a doubling of its homeless population in emergency shelters over the past year. Brigid Schulte, a fellow at New America, reported for the Washington Post.
While a minimum-wage increase and an extension of federal unemployment insurance is on the agenda of Congress for the remainder of the year, legislation dealing with these issues -- or any others for that matter -- are unlikely to advance for the remainder of the year, according to National Journal. The lack of a forcing event was offered as the primary reason, after a budget has been passed, appropriations set, and the debt ceiling increased.![Publication Image]( "Publication Image")
Children’s Savings Accounts
Senator Ron Wyden’s announcement late last week of his interest in universal children’s savings accounts energized the asset-building field. His support for the concept is key, given his approaching ascension to the chairmanship of the Senate’s tax-writing committee, which will give him the prerogative to set the agenda surrounding tax reform. It was a welcome surprise for universal children’s savings accounts to be included among his top priorities, especially because of all the other pressing issues with the current tax code, which Wyden graphically described as a “dysfunctional, rotten mess of a carcass.” Howard Gleckman, writing for TaxVox, the Tax Policy Center blog, identified some the solutions offered by Wyden to address them: revise unequal saving incentives, enhance the Child Tax Credit and the Earned Income Tax Credit, narrow the gap between taxation of investment income and ordinary income, and so on. Writing for New America’s online magazine The Weekly Wonk, Justin King described one way Wyden could achieve his goal of universal children’s savings accounts: the ASPIRE Act.
Senator Wyden isn’t the only policymaker moving to promote children’s savings accounts. In his State of the State address, Connecticut Governor Dan Malloy announced his intention to create a universal system of college savings accounts for young children in the state.
Other state and local leaders with a track record of supporting and implementing children’s savings accounts appeared at a meeting of the federal government’s Financial Literacy and Education Commission (FLEC). Jose Cisneros, Treasurer of the City and County of San Francisco gave information on the City’s Kindergarten to College program; Kate Marshall, Treasurer of the State of the Nevada detailed her plans to provide college savings accounts to all children in Nevada through the Nevada College Kick Start program, and; Eileen Klein of the Arizona Board of Regents highlighted the state’s nascent Earn to Learn program, that leverages federal Assets for Independence funds to boost college savings.
Education
As Hope Yen reported for the Huffington Post, “The earnings gap between young adults with and without bachelor's degrees has stretched to its widest level in nearly half a century.” But even as a college degree becomes an ever more important qualification for succeeding in today’s economy, access to a degree remains unequal. A new video by MDRC describes how many low-income, college-ready students are “undermatching” in their college selection. They enroll in colleges “for which they are academically overqualified” or are “not going to college at all.” One explanation could be rising costs for a college education at the same time as diminishing numbers of need-based aid packages. Stephen Burd of New America’s Education Policy Program describes how public universities, like the University of Virginia, are feeling the pressure of the so-called "merit aid arms race,” which leads them to adopt more restrictive enrollment practices that disproportionately affect low-income applicants. If need-based aid from the school isn’t an option, one would think that federal student aid would remain on the table for needy families. But as Liz Weston revealed this week, filling out a FAFSA form that shows a low income actually hurts applicants’ chances for being admitted. Finally, New America’s Josh Freedman described in Forbes how, even after students are admitted to a college, the nation’s over-reliance on student loans puts students in tenuous financial positions. Loans are, he says, “the worst way to fund college.”
Financial Services
Shaila Dewan described an interesting finding in her article for the New York Times Magazine. We tend to think of credit card debt as exclusively a bad thing, especially for low-income families, but in certain controlled circumstances, “credit card debt can help the poor.” The key is to allow low-income families to build credit through repayment of the debt, as overseen by an organization like the Local Initiatives Support Corporation, the director of which Dewan interviewed for her article. Making loans affordable for low-income people is still important, though, and postal banking, according to David Lazarus for the Los Angeles Times, is a good solution. Such an option isn’t unprecendented, of course: we had postal banking in the U.S. during the first half of the twentieth century, and indeed Nish Acharya argues in Forbes that the U.S. government actually has a pretty good track record in terms of “driving innovation in financial services.” He identifies myRA and postal banking as two such examples. Finally, Jacob Gershman for the Wall Street Journal told of a bizarre string of events that led to a "Kafkaesque black hole of credit unworthiness" for one woman seeking a mortgage in the private market.
Quick Hits
A new retirement fund has been proposed for residents in Connecticut, continuing the pattern of state action on retirement shortcomings that began with California’s Secure Choice effort.
As part of their Assets and Opportunity Scorecard, CFED has released an infographic that details “Who are the Liquid Asset Poor?” The results may surprise you.
D.C. was the only major city in the country to see a doubling of its homeless population in emergency shelters over the past year. Brigid Schulte, a fellow at New America, reported for the Washington Post.
While a minimum-wage increase and an extension of federal unemployment insurance is on the agenda of Congress for the remainder of the year, legislation dealing with these issues -- or any others for that matter -- are unlikely to advance for the remainder of the year, according to National Journal. The lack of a forcing event was offered as the primary reason, after a budget has been passed, appropriations set, and the debt ceiling increased.
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