Retailing a Better Future: LEAF College Savings

Monday, February 23, 2015

We first learned about LEAF College Savings a couple of years ago, when we had a phone call with the founder to talk about our research regarding the educational outcome effects of college savings and the particular features of LEAF's approach. Since then, we've watched LEAF ads pop up in our Gmail and Google searches and seen the advertisements in online and print publications. LEAF has added new features and marketing appeals, efforts that, from our perspective, could provide some interesting analyses: what can we learn about what motivates people to save? What kinds of messages resonate most? These are questions of interest not only to a business like LEAF, of course, but also to states that are encouraging people to enroll in their 529 programs, countries like Canada that are considering how to increase utilization of their inclusive education savings plans, and Children's Savings Account programs that want to either convince people to participate or (in the case of those programs with automatic enrollment) induce greater buy-in among savers.

Paralleling LEAF's approach are efforts within some state 529 plans to, for example, allow for third-party contributions (Rhode Island has seen significant asset accumulation from its gifting within CollegeBound Baby, for example, and Kansas changed its 529 statute to explicitly allow for contributions from outside the child's family). LEAF is also incorporating social marketing efforts, such as integrating the college savings gift cards into children's book promotions and customizing the design of the gift cards. Some of LEAF's efforts closely align with AEDI's research on children's savings (and, in fact, LEAF references AEDI's "7x more likely" finding), including emphasizing the value of small-dollar accounts, encouraging early account opening, and supporting families in the selection of an actual 529 account and other, more technical, aspects of initiating a college savings account.

And our research suggests some ways that LEAF might multiply their effects on children's asset building and educational outcomes. The material on small-dollar accounts could emphasize the potential for educational effects as well as actual balance accumulation, for example. LEAF could provide information to help parents to more critically compare 529 plan options. And, of course, making college savings progressive would increase LEAF's impact, perhaps by encouraging the purchase of gift cards that would, then, be used to increase savings opportunities for low-income children, and incorporating LEAF into Children's Savings Account programs. Currently, if LEAF gift cards aren't redeemed, the face value of the account is refunded to the purchaser; an option that would allow the value to be invested in a 529 even without an overt action by the child/parents would increase LEAF's value as a catalyst for children's savings. And, of course, additional outreach and promotion will likely only increase LEAF's effects. We want to see messages about college savings not only in our magazines and search engines but also at the checkout line, at sporting events, and on children's cartoons.

An intervention as potent as a college savings account should be woven into every moment of a child's economic life. With a concerted appeal to think about college savings on birthdays, at graduation, and for holiday presents, LEAF is taking steps in the right direction.

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