Building Brighter Futures: Children’s Savings Accounts in Illinois

Resource Overview

Building Brighter Futures: Children’s Savings Accounts in Illinois, a report from Heartland Alliance’s Social IMPACT Research Center and IABG, has found that Universal Children’s Savings Accounts (CSAs), which are accounts opened at birth intended to be used towards post-secondary education, play a key role in expanding opportunities for college savings for Illinois children. CSAs would support early childhood development, increase college completion rates, strengthen families’ financial capability, and have a long-term impact on the state’s economy.

The report examines the current 529 college savings program in Illinois, Bright Start, and finds disparities across the state. Synthesizing data from focus groups and Bright Start account data from the Illinois State Treasurer’s Office, we found that:

  • Bright Start, like other investment products, is disproportionately used by individuals who are white, educated, male, suburban, middle-aged, and earning higher incomes. Black people, Latinos, lower-income families, and women are underrepresented in the Bright Start program.
    • White people comprise 88 percent of Bright Start savers, while Asians make up 8 percent of savers and black people and Latinos each make up about 2 percent of savers.
    • Only 4 percent of Bright Start savers make under $30,000 per year.
  • Illinoisans of color and low-income Illinoisans face significant barriers to saving for higher education, including competing savings pressures, life expenses and debt repayment, gaps in financial education, and mistrust of financial institutions.
  • A CSA program could have a profound effect on the racial wealth gap in Illinois—the gap in assets between white households and households of color. Depending on funding and participation, these accounts could reduce the racial wealth gap for young adults by as much as one-third while raising the wealth levels of all racial groups.

Building Brighter Futures provides a number of federal and state policy recommendations that would make a CSA program a reality for Illinois families and remove savings barriers faced by low-income families, including:

  • State legislation to create a scalable statewide structure that expands the Bright Start Program to provide a 529 college savings account for all children born in Illinois. Phase in such a universal children’s savings accounts first at the community level, with the goal of implementing it statewide for every child.
  • Communities should incorporate key features to ensure program sustainability and high participation, including creative engagement of youth and families, diverse and committed local leadership, and more.
  • Federal tax benefits should be expanded to include a refundable tax credit for low- and moderate-income families that save for college.
  • The federal government should also consider a “savers bonus,” which would allow low- and moderate-income taxpayers to deposit their tax refund into a savings account and receive a one-to-one dollar match each year.

Download the full report to learn more.

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