FDIC Youth Savings Pilot Program

FDIC Youth Savings Pilot Program

Photo: teacher in front of clasroom

“Linking financial education with an opportunity to open a safe, low-cost savings account can help young people better develop good savings habits and promote financial inclusion for students and their families . . . ”
FDIC Chairman Martin J. Gruenberg

Many banks report having relationships with schools to offer financial education and to offer options to open savings accounts; however, some banks have questions on how best to support youth savings and financial education, and there is limited information on how successful bank-school partnerships make a positive impact in an efficient and effective manner.

The FDIC Youth Savings Pilot Program seeks to identify and highlight promising approaches to offering financial education tied to the opening of safe, low-cost savings accounts to school-aged children.  Phase I includes institutions currently working with schools or nonprofit organizations that help students open savings accounts in conjunction with financial education programs during the 2014-15 and 2015-16 school years. Phase II will include institutions beginning or expanding youth savings account programs during the 2015-16 school year.

Over the course of the Pilot, participants are connected with one another and technical assistance resources to identify, develop, and share best practices.  FDIC staff also helps Pilot participants troubleshoot implementation challenges.

We are collecting basic information from Pilot participants to document innovative practices and assess success of the initiative.  In general, data are collected three times each semester (the start, midpoint, and end).  Data are collected as an aggregate average from each institution. In addition to communicating with the bankers participating in the Pilot, we may contact school or non-profit organization representatives to learn more about their experiences.   The data will include, for example, the number of accounts opened, the average saved in the accounts, indications on whether the youth accounts helped the institution establish account relationships with the parents, the on-boarding process for the accounts, the financial education strategy used and its reception, the longevity of account relationships, whether banks felt satisfied with their work with the school, and whether the bank’s expectations were met.

Findings from the Pilot are expected to heighten awareness and understanding of how youth savings programs can effectively be carried out consistent with Customer Identification Program (CIP) requirements and other regulatory expectations.  The FDIC plans to issue a report in the fall of 2016 to communicate lessons learned from the Pilot and offer promising practices for banks to work with schools or other organizations to combine financial education with access to a savings account.

Benefits of Participation in Youth Savings Initiatives

Financial education and school-based savings programs introduce young people to financial services at an early age, while helping youth learn how to manage their money more effectively. These and similar youth savings programs not only encourage the development of savings habits at a formative age, but also have the potential to promote economic inclusion for entire families. A report issued by the U.S. Department of the Treasury found that having a bank account both intensified the effect of financial education instruction for students, and in schools where there was a branch of a federally-insured financial institution, students had more positive attitudes towards banks and were more likely to have a bank account.

Financial institutions that participate in youth savings account programs traditionally do so to build relationships for the long-term that can potentially be profitable in future years. Institutions that participate in these programs may also:

  • Receive positive consideration under the Community Reinvestment Act, as qualifying community development services include establishing school savings programs and developing or teaching financial literacy curricula for low- and moderate-income individuals (Reference: Interagency Questions and Answers Regarding Community Reinvestment).
  • Create positive community goodwill.
  • Expand potential business opportunities.

See also the interagency Guidance to Encourage Financial Institutions’ Youth Savings Programs and Responses to Frequently Asked Questions.

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