A new College Savings Account Research Demonstration Project was unveiled by the U.S. Department of Education yesterday designed to help disadvantaged students pay for higher education.
The $8.7 million needed for the initiative will come from federal funds in Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), aimed at improving college readiness among low-income middle school and high school students.
About 10,000 GEAR UP students will receive $200 in seed money to start accounts as freshmen in high school. Students then will have the opportunity to earn $10 a month, which would be matched by the government over the next four years, with the chance to save more than $1,000 by the end of high school. The money would be designated for educational expenses in college. The hope is that the savings accounts and counseling will help students develop smart financial habits.
To measure the success of the concept, GEAR UP will follow the outcomes of students receiving savings accounts with a control group of peers who did not. Research suggests that savings accounts can be a factor in students enrolling in college.
“We believe that savings accounts play a key role in helping all students—especially those from low-income families—access and succeed in college,” said U.S. Secretary of Education Arne Duncan in a press statement. “Empowering disadvantaged students with financial resources and skills will enable them to make smart investments in higher education —and we’ll gain valuable knowledge about how to best serve these students in the future.”
GEAR UP grantees who received new awards in FY 2011 or FY 2012 and are participating in the cohort model are eligible to apply for the project.