Saving Up for College, Gearing Up for Success: A Holistic Strategy for Increasing Access to Higher Education

July 01, 2013
By  Johanna Gruenewald

As the cost of college attendance continues to rise and the availability of grants and scholarships simultaneously dwindles, higher education has become less accessible to those who are unable to shoulder the expense. (See Figure 1.) Child development accounts (CDAs), however, represent a promising tool for moderating such financial barriers.


Sources of Funding by Income Level

Figure 1


Similar to individual development accounts, CDAs are savings accounts specifically designated for postsecondary education. A substantial body of research supports the effectiveness of CDAs in facilitating both college enrollment and completion, with particularly significant implications for low-income students.[1] Although these accounts are not new, emerging collaboration between CDA initiatives and college access programming offers an exciting opportunity to provide students with the social and financial resources necessary to make the prospect of higher education a reality.

Traditional Models

Traditionally, CDAs have been distributed through three primary channels. First, states offer 529 college savings plans, which allow resident families to set aside funds for postsecondary education. While these accounts have been instrumental in providing households with tax-advantaged savings opportunities, they remain largely underutilized by low-income families.

The second avenue through which CDAs have been administered is community-based organizations, many of which have attempted to make the accounts more inclusive by using federal grant dollars to offer matching incentives to income-eligible individuals. Though many such initiatives have demonstrated success, their voluntary nature has proven to limit widespread participation.

The third and most recently developed delivery method is through cities. In 2010, the San Francisco Office of Financial Empowerment devised a strategy to circumvent the opt-in problem associated with voluntary programs by administering CDAs to all kindergartners in the public school system.[2] This effort is too new to warrant conclusions regarding its effectiveness.

An Innovative Approach

Growing enthusiasm for CDA programs in the past several years has sparked continued innovation in service-delivery methods. In 2011, the U.S. Department of Education (DOE) announced an invitational priority to support the merger of CDAs into Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), a federal college access program.[3] Intended to provide early intervention services, GEAR UP offers grants to states and organizational partnerships for the purpose of establishing local projects targeted at low-income middle and high school students. The mission of GEAR UP is to increase rates of high school graduation as well as college preparedness, participation and completion through support services such as mentoring, tutoring, academic and financial counseling, and application assistance. The recent inclusion of savings accounts was primarily in response to research at the University of Kansas and at Washington University in St. Louis that links CDAs to improved educational outcomes.


Percent of Youth Enrolled in College Within 5 Years of Graduating High School

Figure 2


At the end of the 2011 granting cycle, there were 66 new GEAR UP grantees, 42 of which proposed to offer savings accounts to project participants. Due to the great interest demonstrated by applicants, the DOE subsequently announced plans to conduct a national research demonstration. Washington University's Center for Social Development, in collaboration with global research firm Abt Associates, will lead the effort to determine the effects of incorporating savings opportunities into traditional GEAR UP activities. Results of the study will likely impact future policy initiatives related to both higher education and savings programs.

The six-year evaluation, which will begin in 2014, will include 20,000 students at 200 high schools in 10 different states.[4] Participants will be randomly assigned to receive either regular GEAR UP services or regular services plus the additional savings component. Those in the savings group will receive an account with a $200 seed deposit and will have the opportunity to earn a dollar-for-dollar match of $10 per month for four years thereafter.[5] By the end of the program, students could save more than $1,000, all of which would be used to cover educational expenses upon college enrollment. Students will also be able to take advantage of GEAR UP's financial counseling services to obtain additional scholarships.

Though past CDA programs have paired savings accounts with general financial education, the GEAR UP model represents the first large-scale, federally endorsed partnership between college access and matched-savings initiatives. Evidence suggests that both college access programs and CDAs have independently beneficial effects on college enrollment and completion rates (see Figure 2), especially among low-income youth. It remains very promising, then, that the combination of the two will produce favorable results.

While college readiness services are indeed critical in preparing students for the application process, such efforts are fruitless if families do not have the financial means to fund higher education. Likewise, financial resources without sufficient academic and social supports may not be adequate in promoting college attendance. The collaboration between GEAR UP and CDAs, therefore, represents an important advancement in holistic service provision that will allow some of America's most disadvantaged youth to reap the many benefits of higher education.


  1. Elliot, W. (2012). "Are All Types of Financial Aid Created Equal?" Bridges, 1-3. Retrieved from [back to text]
  2. Kindergarten to College. Retrieved from [back to text]
  3. GEAR UP. Retrieved from [back to text]
  4. "Washington University Researchers to Help DOE Study College Savings Accounts." Retrieved from[back to text]
  5. "Education Department Releases Proposal to Help Thousands of Disadvantaged Students Access College Through Savings Accounts." Retrieved from [back to text]

Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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