Examining the Canadian Education Savings Program and its Implications for U.S. Child Savings Account (CSA) Policy
While we believe that there are significant lessons to be learned from the Canadian experience with education savings programs, as the United States moves towards more comprehensive Children’s Savings Account (CSA) policy, we begin with the perhaps obvious acknowledgement that there are some noticeable differences in the political, educational, and economic contexts of Canada and the United States. For example, in 2011, Canada ranked first in overall post-secondary education (PSE) attainment among OECD countries, with more than 50% of adults ages 25 to 64 having some PSE credentials (Kenney, 2013), while the U.S. ranks 14th, with 42% attainment (OECD, 2012). Perhaps related, economic mobility rates—the likelihood that a child born into poverty will not stay in poverty as an adult—are far higher in Canada than in the U.S. (Corak, 2010). Analysis finds that a son raised in the bottom decile in Canada has about the same chances of reaching the top half of the earnings distribution as a third-decile son in the United States; being Canadian instead of American, then, provides as much of a mobility advantage as being born into a family three times more prosperous (Corak, 2010). Although income inequality is increasing in Canada, the distribution of economic advantage is still far more equitable than in the United States (Corak, 2010). This is transmitted to the PSE arena, as well, where the income attendance gap is smaller than in the U.S. (Belley, Frenette, & Lochner, 2011). Despite these and many other differences, there are enough similarities between the Canadian Education Saving Program (CESP) and, particularly, state-sponsored 529 savings programs in the U.S. that each can still inform the other in important ways.
Lewis, M. and Elliott, W. (2014). Lessons to learn: Canadian insights for U.S. children’s savings account (CSA) policy. Lawrence, KS: Assets and Education Initiative (AEDI).