The Financial Services Environment and Schools' Savings Rates in the San Francisco Kindergarten to College Program

• Published date: 01 December 2019
• Author: Terri Friedline,Ian M. Dunham,Megan O'Brien
• Date: 01 December 2019
• DOI: http://doi.org/10.1111/joca.12264

WINTER 2019 VOLUME 53, NUMBER 4 1797

TERRI FRIEDLINE, IAN M. DUNHAM , AND MEGAN O’BRIEN

The Financial Services Environment and Schools’

Savings Rates in the San Francisco Kindergarten

to College Program

Children’s savings accounts (CSAs) have emerged as a promising

intervention to improve educational outcomes, curtail rising student

loan debt, and promote equality of opportunity. Numerous local-

ized CSA programs have emerged in the last decade, and many are

embedded within school systems. This study leverages novel data to

investigate participation in one of the oldest and most well-known CSA

programs in the country: the San Francisco Kindergarten to College

(K2C) Program in the San Francisco Unied School District. Spatial

analysis of 21,617 accounts at 74 elementary schools reveals statistically

signicant differences in the rates of elementary schools’ K2C account

participation based on the concentrations of banks, credit unions, and

alternative nancial service providers—net controls for neighborhood

demographics. Unless explicitly addressed, substantial variations in the

nancial service environment across neighborhoods could undermine

participation in school-based CSA programs for the very childrenthese

programs intend to support.

Children’s savings accounts1(CSAs) have emerged as a potential solution

to the problems of increasing income and wealth inequality (Piketty 2014),

rising student loan debt (Baum et al. 2017; Dynarski 2015), and doubts

about the effectiveness of education for promoting equality of opportunity

(Addo 2018; Addo, Houle, and Simon 2016; Houle and Warner 2017;

McMillan Cottom 2017; Webber 2016). CSAs are interest-earning and

incentivized bank accounts that are automatically opened for all children

at birth or shortly thereafter for the purposes of saving for and investing in

1. Children’s Savings Accounts are also discussed as Child Development Accounts (CDAs),

College Savings Accounts (CSAs), and Baby Bonds. There are many similarities between CSAs

or CDAs and Baby Bonds, though the policy proposals are not exactly interchangeable. CSAs are

discussed in greater detail by Elliott and Lewis (2015a, 2015b). CDAs are described by Sherraden

and coworkers (Huang et al. 2017; Sherraden 1991). Baby Bonds are discussed in greater detail in a

proposal by Hamilton and Darity (2010).

Terri Friedline (tfriedli@umich.edu) is an Associate Professor at the University of Michigan. Ian

M. Dunham (iandunham@sfsu.edu) is an assistant professor at San Francisco State University,College

of Business. Megan O’Brien (megobr@umich.edu) is a research area specialist at the University of

Michigan.

The Journal of Consumer Affairs, Winter 2019: 1797–1824

DOI: 10.1111/joca.12264

Copyright 2019 by The American Council on Consumer Interests

1798 THE JOURNAL OF CONSUMER AFFAIRS

the future (Elliott, Destin, and Friedline 2011; Sherraden 1991). Originally

conceived as a way to facilitate wealth building among poor children

and families (Sherraden 1991), conceptualizations of CSAs have since

expanded to include the facilitation of educational achievement (Elliott and

Beverly 2011a, 2011b; Elliott, Destin, and Friedline 2011), inclusion in

the nancial system (Friedline, Elliott, and Nam 2013; Friedline, Johnson,

and Hughes 2014; Friedline and Rauktis 2014), and healthy physical and

mental development (Friedline 2015; Huang et al. 2014a, 2017; Huang,

Sheradden, and Purnell 2014b).

Ample research documents CSAs’ potential to generate widespread pos-

itive impacts, nding that CSAs or suitable proxies are associated with

children’s educational achievements including improved math scores and

increased likelihood of college enrollment (Azzolini et al. 2018; Elliott and

Beverly 2011a, 2011b; Elliott, Destin, and Friedline 2011), and reduced

student loan debt (Elliott and Lewis 2015a, 2015b; Elliott and Nam 2013).

CSAs or their proxies are also associated with accumulating wealth (Elliott,

Lewis, and Johnson 2014; Friedline, Johnson, and Hughes 2014; Loya,

Garber, and Santos 2017). Importantly, the children who reap the greatest

benets from CSAs are those at greatest risk for institutional marginaliza-

tion: children of color and lower-income White children (Azzolini et al.

2018; Beverly et al. 2015; Friedline, Elliott, and Nam 2013; Hamilton and

Darity 2017; Sherraden et al. 2018). For instance, race and income inequal-

ities in CSA account opening and saving are reduced or nearly disappear

when CSAs are opened automatically (Beverly et al. 2015). These ndings

are noteworthy given mutually reinforcing trends of wealth inequality and

rising student loan debt that can amplify and sustain race- and class-based

marginalization across the life course.

At the same time, CSA programs are embedded within and contextual-

ized by neighborhoods and communities where variations in resources and

opportunities may mediate potential benets. Children’s savings account

programs currently depend on local partnerships with nancial services

like banks and credit unions to open and maintain children’s accounts

(Markoff and Derbigny 2017). Moreover, nancial service environments

are not created equally.The densities or concentrations of brick-and-mortar

banks, credit unions, and alternative nancial service providers vary sub-

stantially across neighborhoods and communities (Baradaran 2015, 2017;

Caskey 1994; Celerier and Matray 2016; Dunham et al. 2018; Dunham and

Foster 2015; Fowler, Cover, and Kleit 2014; Friedline and Despard 2017;

Graves 2003), affecting access to and use of nancial services even in a

technologically advancing economy that is presumably less geographically

constrained (Davis 2009; Friedline 2018; Friedline and Despard 2017;