Braylon Dedmon was 3 days old when his mother, Talasheia, was offered $1,000 to open a college savings account in his name.
“I was like, ‘What?’” Ms. Dedmon recalled. Her skeptic’s antennae tingled. “I was a little scared.” Was this a scam?
It wasn’t. The offer was the beginning of a far-reaching research project begun in Oklahoma 14 years ago to study whether creating savings accounts for newborns would improve their graduation rates and their chances of going to college or trade school years later.
A few weeks after that initial conversation in 2007, the first statement arrived, showing $1,000 in Braylon’s name. “I was shocked,” said Ms. Dedmon, who now lives in Muskogee. “They started sending me statements every three months, and have been sending me them since then.”
Research about the Oklahoma project published this month by the Center for Social Development at Washington University in St. Louis, which created SEED OK, found that families that had been given accounts were more college-focused and contributed more of their own money than those that hadn’t been. And the effects are strongest among low-income families.
The approach breaks with most social policy programs created over the last half-century, which focus on income supplements. Child savings accounts, by contrast, concentrate on accumulating assets over the long term.
Michael Sherraden, the founder of the center at Washington University, said the idea was to give everyone a stake — an investment — in the future. Benefits of the program extend not just to bank accounts but also to behavior. Households with the seed money — especially poorer ones with parents who did not attend college — have greater expectations about higher education, are more optimistic, have lower rates of depression and save more.
College savings accounts known as 529 plans, which restrict withdrawals and grow tax-free, are used by only a tiny share of American households, mostly in the upper reaches of the income ladder.
Assets and the Poor,” has been pushing for savings accounts, also known as development accounts, that would automatically be opened for every child born in the United States. Canada, Israel, South Korea and Singapore have established versions of the idea.
“We need to create structures to enable people to accumulate assets over the long term,” Mr. Sherraden said. He argues that a universal program is necessary to sustain political support, but that it would nonetheless deliver disproportionate gains at the lower end of the economic spectrum.
“You will reduce the difference in the gap between the highest and lowest group over time,” he said.
In Maine, the private Harold Alfond Foundation started offering every child born in the state a $500 grant in 2009. Mr. Alfond, who founded the Dexter Shoe Company before selling it to Warren E. Buffett, had been writing a $500 check to each of his newborn grandchildren.