AEDI: Where did the idea to start your youth savings program come from?
FUEL: “Bob Hildreth was always interested in education; his parents were educators, and it was a strong influence on his life. He ended up in finance and worked at the IMF and in Latin America, and when he was back, he started his own firm in international finance. Then he turned to philanthropy. In 2007, the New Bedford factory raid (where hundreds of immigrant workers were detained, often leaving their children without adult supports) infuriated him, and he decided to start an unusual nonprofit, to help pay the bail for families, if they could come up with matching funds. This experience taught him how much money low-income families could actually access, and that opened his eyes to the whole asset-building world. Low-income people could save; what was missing was the incentives and structure to facilitate it. His interests in education and financial access merged, and that resulted in FUEL’s savings program. Also, he realized, if we are going to talk about financial literacy with an immigrant population, we also need to focus on parents. Savings are one way to bring parents into the picture of children’s education. We’re pretty unique, really, in that way, because we focus on parents, not just students. We want parents to be involved in children’s education—a lot of literature supports this—so we use tools, including the college savings component, to spark that. In addition to the accounts, we have savings circles, and we share knowledge, too. We bring the community together for the workshops; we offer information in different languages to accommodate families’ needs. It’s all brought together in a very high-touch approach.”
AEDI: How do you answer the question, “Why savings?” To what problems does your youth savings program respond?
FUEL: “Our CSA responds to a lot of issues at once. It engages parents, brings better outcomes in students, addresses college affordability, and creates a culture of savings to counteract the emphasis on borrowing. CSAs hit so many different angles, with a lot of positive externalities.”
AEDI: What were the greatest challenges in establishing your program?
FUEL: “On the main challenges we had was designing a banking product that is most suitable to the families we serve. After several experimentation, we are now satisfied with our saving product. We also struggled to get partners, especially because we ask partners to get some of the funding, and that’s hard. We also have to work on recruitment, which is a continual need. Banking products are the first challenge, then partnerships—particularly funding. We also struggle, often, without the timeline and the data to know which elements make the difference, to inform our program modifications. Every time we want to try to a new savings bonus, or banking service, we don’t know immediately if we’ve made the right decision. It takes a long time to get the information, and it’s hard to single out what produced the outcome.”
AEDI: How has your approach changed since you started? What has spurred these evolutions?
FUEL: “We had a lot of trial and error, to see what works best. We have adjusted the way that we have done the financial curriculum and delivery. Our incentive structure has changed, too. We used to have the incentives bundled, so that you had to come to the circles and save, to get the match, but that was demotivating for families. We had to make this structure simpler, so that each incentive is only linked to one behavior. This came from other research, including in behavioral economics. We wanted to make our structure more positive, with less punitive incentives. We want to learn how people save, and how they prefer to save, so we actually see all of these workshops and reminders and social media…all as experiments with how we motivate people to save. College is a medium for us to reach out to people about saving. We also track students’ college outcomes, but we really just want to find the ways that we engage people with saving. In terms of the essential elements, there a lot of ways to deliver financial education or investor education or parent engagement, so we’re trying to find multiple ways to meet savers where they are. We read a lot of research on ways to get people saving, like with text messages and other high-tech and low-touch approaches. A lot of these have really fast loops; we can send out a message and learn really quickly whether someone responds with saving or not.
Since we are not interacting directly with the students, one of our biggest challenge was to test out whether parents’ attitudinal or knowledge changes really affect students. The curriculum targeting parents is something we take pride in, but we’re not quite sure how we can draw direct correlations between parental knowledge/expectations and children’s college success. We’re still struggling to pin this down, so we started a three-year longitudinal study with the Harvard Graduate School of Education, with an aim to establish the outcomes for students, of providing this treatment for parents. We expect to have these results next year, and, then, some greater insights, but it will still be hard to pinpoint which components are responsible for the outcomes.” This is why we are planning on conducting more studies on our lower-touch model and we are also working on establishing a randomized controlled trial in the near future.
AEDI: What do you view as the most essential elements that determine your success?
FUEL: “If CSAs are to be a scalable movement, the incentives are the most essential piece. Those are easily scalable, if we have the funds. The savings circles and the community components will need to be compromised for scale. We are trying to replace this community concept with a more online platform; there can still be engagement, but it’s a different forum. We’re experimenting with what this might look like. If there is a national CSA, then maybe we don’t have to give up our high-touch approach; we could come on top of this other infrastructure, wherever this might be needed. But, today, where the community organization has to do everything—accounts, education, incentives—we need alternatives that are lower-touch.”
AEDI: What are you excited about?
FUEL: “We’ve been working hard to push legislation, and there is a proposal for 5 pilot sites around Massachusetts. We put a lot of effort into making sure that the pilot would be more than just opening accounts, with parental education and local partners. This is where we are hoping to incorporate a randomized control design, which is very exciting. Hopefully, if that moves forward, it will be a great way to see how they perform. These kids will be at middle- and high-school levels, so we should know more quickly what these results are.”
AEDI: What are your worries, as you survey the landscape for children and youth savings?
FUEL: “Especially for programs that start very early in life, momentum on CSAs may be lost before we start to get results about college. Also, it seems sometimes that, there are many components to get families interested in saving and actually depositing money every month. If this is done really minimally, it won’t look very good, with a lot of unused accounts, and people will discard the idea because they don’t think it works. It’s true: if the vehicle is wrong and it’s not the right approach, people won’t save. The more we put CSAs out there, the more we risk losing credibility, because we won’t have good results. At FUEL Education, we started with such a high-touch approach and we know that we can achieve good results with even our most disadvantaged families, so now we’re looking for the right formula to see how ‘low we can go’”