Later this summer, if you park in a city-owned garage or stick a couple of quarters (or, in a few favored spots, a credit card) into a parking meter in the city, you could be doing your small bit to help a needy kid go to college 13 years from now.
City Treasurer Tishaura Jones is preparing to launch what she calls the College Kids Children’s Savings Account Program. Every child enrolled in a St. Louis Public Schools or charter school kindergarten class will get a college savings account with a $50 “seed deposit” from the treasurer’s office.
Ms. Jones has done a splendid job since being elected to succeed longtime Treasurer Larry Williams in 2012. That said, like most of the other duplicative “county offices,” the treasurer’s office is largely administrative, doing the city’s banking. It should be appointive, not elective.
Sixty percent of what’s left over goes into a discretionary fund for various parking division programs. Mr. Williams lobbied hard for the law in the early 1990s and became the ”parking czar,” an important player on development issues.
Ms. Jones, less interested in being a czarina, now proposes to invest about $175,000 a year in savings accounts for the approximately 3,500 students who enter city kindergartens each year. She’s also raising parking meter rates, but to pay off the high-tech meters, not the college savings program.
The idea is to give the kids a boost toward college when they’re ready. Studies have shown that kids with a dedicated savings fund are four times more likely to attend college.
A perhaps larger goal is to teach children and their families, many of whom are “unbanked” and lack financial sophistication, about the responsible use of money. An estimated 14 percent of city families have no accounts at an FDIC-insured facility. That compares with 9.7 percent nationally. The unbanked are far more likely to fall prey to payday lenders and high-fee check-cashing and tax-preparation operations.
Fifty dollars that sits in a bank account for 13 years at 2 percent is only going to grow to about $65. Even discounting inflation, $65 won’t buy an average college textbook ($79 last year, according to the National Association of College Stores). And if you take a 12-hour load at one of the St. Louis Community Colleges this fall, it will cost you $1,236. Washington University will be somewhat higher ($47,300 a year in tuition alone). The guess here is that prices will be higher in 13 years.
So clearly $50 is symbolic, meant to be a learning tool. “The whole idea is that we have some skin in the game,” Ms. Jones said.
Students can make an extra dollar a week for perfect attendance. Parents, friends and family are encouraged to deposit what they can in their kids’ accounts, and the treasurer’s office will match the first $100. And if parents and guardians complete a financial education course to be offered by one of Ms. Jones’ partners, Wells Fargo Hands-on Banking, another $50 will be deposited.
Amazingly, it seems that merely having a college savings account, regardless of how much is in it, can be an incentive. Even kids with minimal college savings ($1 to $499) are 2.5 times more likely to enroll in and graduate from college.
It’s about creating the idea that there might be alternatives in life.
In June, Ms. Jones was honored by the Clinton Global Initiative for creating an Office of Financial Empowerment. The savings program is part of that, and so is a “Financial Dignity Center” that will open next month at City Hall. Staffed by Operation HOPE, a financial literacy not-for-profit, it will offer free financial education, including individual counseling. Several local banks and financial institutions are underwriting the cost of a full-time staff member, and also will make experts available.
The city program is similar in some ways to one being operated in the Normandy School District by Beyond Housing, a not-for-profit that operates in North St. Louis County. Beyond Housing establishes a $500 Missouri Savings for Tuition (MOST) college savings account for every Normandy kindergartner.
These programs recognize a fundamental fact: Without a college education (or post-secondary vocational training), a kid’s prospects for success are grim. Economic mobility has stagnated; if you’re born poor, you have a 70 percent chance of staying poor when you’re grown up.
The opportunity for a good education that prepares you for a decent job should be a basic right; instead it’s increasingly a function of where you live. Financial literacy should not be an optional skill, and a checking account should not be a mystery.
The promise of America is being broken every day in too many places to too many children. A couple of quarters in a parking meter won’t make up for it, but while we’re working for a better America, it’s a start.
Originally published on July 3, 2015 in the St. Louis Post-Dispatch, the Platform