New America Foundation
By: Payal Pathak
October 15, 2010
As a member of the Global Assets Project, I'm always on the lookout for important news and initiatives taking shape on the youth savings front around the world, sometimes overlooking what is happening in our own backyard. But the Foster Youth Financial Security Act caught my attention and CFED is encouraging you to bring it to the attention of your representatives. So why does this bill matter so much? Well, research shows that for vulnerable youth, having access to assets can have powerful impacts on improving livelihoods and as foster youth are particularly vulnerable when entering adulthood, savings can be an important tool in helping them prepare for and adjust to this pivotal transition.
Spearheaded by Congressmen Jim Langevin (RI-D)and Congressmen Fortney Pete Stark (CA-D), the Bill would provide $50 million to support nearly 400,000 foster youth (at least 14 years of age) who are transitioning to adulthood, by opening individual development accounts. A phenomenon that began in the United States in the 1990s, IDAs are matched savings accounts geared towards promoting a social bottom line, whether it's increasing access to education, housing support, or health care for low to middle-income households. Thus, in the spirit of IDAs as an important development tool in the United States, it's only fitting that they be extended to a group of young people who, as research shows, "are more likely to forego higher education, be in poor health, become homeless, and rely on public supports as adults."
Already, savings initiatives targeting foster youth specifically, and vulnerable youth, more generally have proven effective. In Uganda, the SUUBI ("Hope") project, led by Fred Ssewamala, provides orphaned youth with matched savings accounts. Studies out of SUUBI have shown that in addition to increased savings amounts, participating orphans had increased aspirations to pursue education, higher self-confidence and improved health behaviors. Also on the global front, the YouthSave Initiative has argued for the positive developmental benefits of youth savings since its inception and has started working to design, pilot and test savings accounts for vulnerable and low-income youth in four developing countries. Domestically, findings from SEED have established the links between asset-building and economic security, inspiring initiatives, such as the Kindergarten-to-College (K2C) program, to continue with its important work of providing youth with assets as early as possible.
Based on the research cited here and a growing body of literature on the potential for youth savings accounts (YSAs) to impact vulnerable livelihoods positively, the "Foster Youth Financial Act"certainly has promise in achieving its goal: helping foster youth transition to adulthood. And I'm hopeful that as research builds on the positive effects of YSAs, this won't be the last Bill on youth savings initiatives yet.