Child Development
Accounts (CDAs) encompass a universal policy concept of giving every
child, particularly children from low-income families, a savings account
for the purpose of accruing assets beginning at birth. Savings accumulated
in a CDA may be used for many development purposes, including post-secondary
education, homeownership, and business initiatives. CDAs have been successfully
implemented in the U.K. and Singapore. Pilot CDA programs are currently
underway in China, Kenya,
Hungary, Indonesia,
Slovakia, and Peru.
In the United States, CSD is leading a demonstration in Oklahoma—SEED
for Oklahoma Kids (SEED OK)—of an inclusive, universal CDA program
that uses 529 accounts as the savings vehicle, and is participating
in Savings for Education, Entrepreneurship,
and Downpayment (SEED), a multi-year national initiative to develop,
test, and impel matched savings accounts and financial education for
children and youth.
529 accounts,
named for the applicable section of the federal tax code, have emerged
as a tax-advantaged tool for accumulating savings. These state-sponsored
plans allow generous savings and are open to all individuals, regardless
of income. Although 529 accounts are specifically designed for college
savings, their design provides for centralized accounting, low deposit
minimums, and matching provisions—characteristics that make the
accounts promising building blocks for an inclusive CDA policy.
