More than 1,000 Oklahoma babies receive $1,000 for college savings

More than 1,000 Oklahoma babies have received a $1,000 jump-start on saving for college, thanks to SEED for Oklahoma Kids (SEED OK), a seven-year study designed to determine the economic and educational impact of “seeding” a college savings account for children at birth.

SEED OK, announced by Gov. Brad Henry and State Treasurer Scott Meacham, is a collaboration between the Oklahoma State Treasurer and the Center for Social Development (CSD) at the George Warren Brown School of Social Work.

In late 2005, Oklahoma was chosen for the study through a competitive bid process. Beginning last year, 2,708 randomly selected Oklahoma families with newborns agreed to participate.

Half of the newborns in these families received $1,000 in a special SEED OK account in the Oklahoma 529 College Savings Plan. Families can also make additional deposits in their own accounts. As part of the study, these deposits may be matched with up to $250 per year for four years, depending on income eligibility.

The other half of the children received no money, but their parents will participate in the study by completing periodic interviews about their saving behaviors.

Michael Sherraden, Ph.D., the Benjamin E. Youngdahl Professor of Social Development, founder and director of CSD and creator of individual development accounts (IDAs), which are matched-savings programs that work similar to a 401(k), says the results of the SEED OK study could impact state and national policies aimed at creating child development accounts at birth.

“The theory behind SEED OK is to determine how saving and accumulating assets within a household affects the family and educational achievement of children,” Sherraden said.

“For instance, we anticipate that having an account for college education will lead parents to think positively about college opportunities for their children. Maybe they will be more likely to turn off the TV and read to their young children. We will be asking these questions,” he said.

“Research results will inform future policy for child development accounts, not only in Oklahoma, but in many other states as well. If results are positive, the policy goal will be to have an account for every newborn in the nation,” Sherraden said.

Sherraden said Oklahoma was chosen due to the diversity of its population, the strong working relationships between Meacham and other state agencies such as the health department, excellent features of the Oklahoma 529 College Savings Plan and commitment to the SEED OK policy innovation and research.

The Ford Foundation provided early support for the launch of SEED OK and is now the major funder. Additional support is provided by the Charles Stewart Mott Foundation and Lumina Foundation for Education. RTI International is the study’s survey research firm.

SEED OK is part of a larger initiative called Saving for Education, Entrepreneurship, and Downpayment (SEED), which is designed to help develop a policy that would create accounts beginning at birth for all children in the United States. Other projects in SEED include community-based studies and state and federal policy projects.

Partners in SEED include CFED, the University of Kansas School of Social Welfare, the New America Foundation and the Aspen Institute’s Initiative on Financial Security.