To mark financial literacy month, “Need to Know” correspondent Stacey Tisdale travels to Mississippi to examine a program designed to help low-income, mostly African-American children save for college — and teach them about banking and money along the way.
African-Americans, on average, earn less, bank less and save less. A lower percentage of African-Americans graduate from college which means bridging the economic divide won’t narrow unless something changes. Educational and financial disparity is especially severe in the deep south, in states like Mississippi, where poverty rates are high and school rankings low. But Mississippi is also one of the places where new efforts are underway to help many of these children learn to save for college.
The Mississippi College Savings Account Program was developed by the Corporation for Enterprise Development, a Washington, D.C.-based nonprofit, and funded by the W.K. Kellogg Foundation. The initiative has opened 650 savings accounts for mostly low-income, African-American children in Jackson and part of the Mississippi Delta. Run in Mississippi by Delta State University and a coalition of local governments, banks and non-profits. These are deposit-only savings accounts in the kids’ names and the money can only be used for future educational expenses. The $135,000 Kellogg Foundation grant helps seed each account with $50 when families sign up, and provides incentives for saving – like a three-to-one match for all deposits.
The goal here is not just to save money: the aim is to teach good financial habits and create positive expectations. The city of San Francisco funds accounts for every kindergartner. Another similar program is in place in Hawaii elementary schools and for thousands of charter school students in Washington, DC, New York, Chicago and Houston.