SEED Offers Life Lessons, Monetary Gains

The United States has had the lowest after-tax savings rate since the 1950s. Data illustrate the undeniable need to teach the urgency of saving money and to start that financial education at an early age. Children who receive financial education and learn to save just 10 percent of their money are far ahead of peers who do not have the same opportunity.

In an effort to close this critical gap in economic success, the Sargent Shriver National Center on Poverty Law and the William J. and Charles H. Mayo Elementary School of Chicago partnered three years ago to deliver 63 SEEDs, or tax-advantaged college savings accounts called “529s,” to elementary school students. Each accountholder received an initial deposit of $500 and was encouraged to continue saving through a dollar-for-dollar match for deposits totaling $1,500 at the end of the program in December 2007.

As of July 2007, SEED (Savings for Education, Entrepreneurship, and Downpayment) participants have accumulated more than $55,000 in their accounts, including matching funds. The program includes after-school financial education classes for both children and parents. Chase Bank manages the accounts, and the Shriver Center’s Lorri McClinton-Powell directs the program, one of twelve pilots scattered in cities across the country.

The program’s promising results bode well for a new national policy for reducing poverty. Participants in SEED are experiencing personal monetary gain and learning life lessons.

McClinton-Powell, the SEED director, characterizes saving as a discipline: “A discipline must be taught and practiced; these students have made a real commitment to their future.” Financial education curricula and structured savings plans teach skills often overlooked in marginalized communities and encourage families as a whole to modify their ideas about fiscal responsibility. Parents of SEED participants are going back to school to finish and pursue degrees; previously unemployed parents are finding jobs and seeking higher pay.

The SEED program demonstrates that universal children’s savings accounts are a viable regional or national initiative; McClinton-Powell has seen meaningful changes in her students and believes that lifelong savings programs for children foster a family’s belief that saving for the future is possible. However, according to McClinton-Powell, “without new funding streams, this program cannot continue beyond December 2007.” As a pilot program, SEED serves its current participants, and additional programming and analysis could track future savings and higher-education achievements. Without grant money and foundation support, the SEED program cannot continue.

For more information on SEED, contact Lorri McClinton-Powell at 312.263.3830 ext. 271.