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Financial Education and Matched Savings for Student Success September 2014

Financial Education and Matched Savings for Student Success September 2014. Assets for Independence Program Office of Community Services Administration for Children and Families U.S. Department of Health and Human Services. Assets for Independence.

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Financial Education and Matched Savings for Student Success September 2014

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  1. Financial Education and Matched Savings for Student SuccessSeptember 2014 Assets for Independence Program Office of Community ServicesAdministration for Children and FamiliesU.S. Department of Health and Human Services

  2. Assets for Independence Provides 5-year grants to organizations that enable individuals to ... • Learn about financial and consumer issues • Save in special matched savings accounts In order to … • Become more self-sufficient and plan for the future • Invest in assets: • Home • Small business • College education or job training

  3. AFI Projects & AFI Participant Success • Approximately 300 organizations throughout the nation • 501(c)(3) non-profits • State, local, and tribal government agencies (must partner with a 501(c)(3) non-profit) • Community Development Financial Institutions • Designated Low-income Credit Unions • Locate a project near you: • http://IDAresources.acf.hhs.gov/AFIgrantees • Since 1999 89,000 families have deposited $91.1 million into IDA accounts and purchased more than 39,000 assets.

  4. Meet IDA Saver “Iris” Iris opens an IDA to help pay for college Match rate of $4 for every $1 saved in her IDA Iris saves $1,000 -- $41.67/month over 2 years She takes courses in financial education from a local non-profit and works with financial aid counselors and academic advisors at her college $1,000 Savings $1,000 Iris Saves $4,000 Matching $2,000 Federal* $2,000 Non-Fed *Maximum Federal Contribution is $2,000 per individual/$4,000 per household $5,000 for Education 4

  5. AFI Participant Savings and MatchExample AFI Participant Savings & Match $1 Deposited: $3 Match

  6. Savings and MatchExample AFI Participant Savings & Match $1 Deposited: $1 Match

  7. Allowable Uses of IDA Funds

  8. Allowable Uses of IDA Funds

  9. Allowable Uses of IDA Funds

  10. Bringing IDAs to your Students • Eligible applicants: • 501(c)3s • State, local, or Tribal government entities • CDFIs or low-income designated credit unions • Multi-site networks of organizations • Operate your own project, or partner with an existing project?

  11. Benefits to the College • Help schools meet mission of access by promoting access to education for lower-income students • Promote positive recruitment and retention results • IDAs as an outreach tool to attract students • IDA funds make it financially possible to attend school • Planning process means students are prepared and committed • Training provides helpful life skills that contribute to student enrollment/retention success • Financial fitness training can impact future employability (credit score)

  12. Considerations for starting an AFI project • Does your organization provide services that involve some level of longer-term, ongoing one-on-one contact with students/residents? • What office is best positioned to operate the AFI project, with support from partners? • Recruitment, case management, tracking deposits, fiscal and grant management, reporting • Do you have a good number of students/residents that are likely to be eligible? • What non-federal sources can you tap into?

  13. Participant Eligibility Two options for determining eligibility: TANF eligibility: OR Household income & net worth: • Determined at the household level • Grantees may have additional requirements • Must have earned income for savings deposits

  14. IDAs for Students • Federally-supported IDAs are not counted as an asset for federal aid programs, so will not impact eligibility • Participants can withdraw from the program at any time, taking their personal savings with them • Only interest earned on participant’s personal savings is potentially taxable • Schools are encouraged to exclude IDA for state, local or school-funded assistance

  15. IDAs as Student Aid • Can reduce student loan and/or work study burden • Can help with the estimated family contribution • Can fill a gap left if a school cannot provide the full Financial Aid Package needed • For adult students, represents an alternative to scholarships • Helps students who cannot access federal financial aid • Helps students from groups traditionally reluctant to take out loans

  16. Current college & university AFI grantees

  17. Arizona Earn to Learn Initiative • University of Arizona, Arizona State University, Northern Arizona University • Universities provide the non-federal funding • http://www.azearntolearn.org/ “It is estimated that for each federal dollar invested in IDAs, five dollars go to the national economy in the form of new businesses, additional earnings, new and rehabilitated homes, reduced welfare expenditures and in the case of Arizona Earn to Learn, human capital associated with greater educational attainment.”

  18. Program Details • 4 hours of personal finance training, one-on-one financial coaching, college readiness training and ongoing support • Participants receive an 8:1 match on their savings, up to $4,000 per year, on $500 savings. • The universities are layering multiple AFI grants – one per year. • Each university has their own eligibility requirements, above AFI eligibility standards. • 8 financial institution partners.

  19. STEM • Notably, over half of AZEL participants have indicated their intentions to pursue a science, technology, engineering, or mathematics (STEM) degree. Given the interest AZEL participants have in pursuing STEM careers and the potential impact that this “Saving-to-Scholarship” model can have on improving the financial self-sufficiency and educational attainment of Arizona youth, AZEL can contribute to developing a highly-skilled 21st century Arizona workforce.

  20. Looking Forward • As of August 2013, 73 AZEL Savers earned their first of two anticipated AZEL scholarship disbursements of $2,000. • Vision for the future of AZEL • replication at other institutions • integration of a peer-to-peer mentoring component, • expanding the current internship component that pairs students with community partners, and • developing an internal evaluation plan to monitor change in participant knowledge and behavior, as well as overall program impact.

  21. Not a fortune, but a world of difference

  22. AEI Resources Biannual Report: Building Expectations, Delivering Results can be found at http://save4ed.com/ Report on college debt at http://save2limitdebt.com/

  23. AFI Program Requirements • Cost Sharing (100% non-federal match) • Project Reserve Fund • Funding Restrictions (85%/15%) • Participant Eligibility • Financial Education, Asset Education • IDA Match Rate • Use of IDA Balances - Asset Purchases • Reporting

  24. AFI Project Accounts • Two accounts: • Project Reserve Account • One per AFI project • Owned by grantee, held at insured financial institution • IDAs • Many (one for each saver) • Set up as custodial (jointly-owned by the grantee and the saver) accounts at Federally-insured financial institution • Can be held at multiple financial institutions • Participants “earn” matching funds as they complete the program requirements (make deposits, complete training, etc.) but the matching funds are not co-mingled with their savings until payout.

  25. Sources of Non-Federal Funds for AFIReported by Grantees Source: 2014 AFI Data Reports

  26. Sources of Non-Federal Funds Financial institutions and their foundations State and local governments Tribal governments United Way Foundations (local, regional) State/Local tax credits Special needs funding opportunities (Mental Health, Youth Programs, Disability Programs, and other nonfederal funding streams that target specific populations) Locally-based corporations/employers Places of worship Individuals/online donations Sponsoring organization funds Federal Home Loan Banks Community Development Block Grants Native American Funds Making the Business Case: http://www.idaresources.org/IDA_Fundraising

  27. Uses of AFI Project Funds • All AFI Project funds are held in a Project Reserve Fund. • At least 85% set aside to match participant IDA savings • A total of 15% can be spent on program operation costs.

  28. Payouts • When the grantee has approved an asset purchase, the grantee will provide payment directly to the 3rd party vendor • Funds are taken proportionately from the saver’s IDA and from matching funds held in the Project Reserve Account • Example: Saver submits a $400 tuition bill. AFI project offers a 3:1 match on savings. Payout will be $100 from IDA savings and $300 from matching funds.

  29. Identifying Potential Funders For each of your asset goals, determine: • Aside from the IDA accountholders, who else shares these goals? • Who else benefits from your success? • Private sector: lenders, education & training institutes, etc. • Public sector: local government, CDCs, etc. • Community development sector: specific communities, neighborhoods • Who is already funding this work? What existing sources of funding can you leverage?

  30. Evaluation Criteria

  31. Bonus Points • Community Development • Partnering with comprehensive neighborhood change projects (Promise Neighborhoods, Choice Neighborhoods, Promise Zones, etc.) • Key Collaborations • Collaborating with other agencies (TANF, Head Start, etc.) • Serving families in the child support system, foster care system, persons with disabilities, refugees, Native Americans, or survivors of domestic violence • Unserved States • Serving Rhode Island and Wyoming

  32. The Two-File Requirement • File One: Project Description and Budget & Budget Justification • File Two: Appendices • Required standard forms will be accepted in addition to the two files • Learn more: “Grants.gov and the Two File Requirement” webinar at www.IDAresources.acf.hhs.gov/Apply

  33. Next steps: • Share AFI information with agency leadership, partners, and staff • Contact the AFI Resource Center for a copy of the AFI Application Kit • Attend Prospective Grantee Webinars (register at www.IDAresources.acf.hhs.gov/Calendar) • October 7 - Prospective Grantee Webinar 3: Developing Resources and Partners • December 2 - Prospective Grantee Webinar 1: Planning an AFI Project

  34. AFI Request for Proposals • Funding Opportunity Announcement: • http://www.acf.hhs.gov/grants/open/foa/view/HHS-2014-ACF-OCS-EI-0774 • $10,000 to $1,000,000 per project period • Due dates: • FY 2015: 10/27/2014 and 04/20/2015 • FY 2016: 10/19/2015 and 04/18/2016 • Compare new FOA to previous: “An Introduction to the 2014 AFI FOA” recording at: www.IDAresources.acf.hhs.gov/Apply

  35. Upcoming Webinars  FY2015 schedule TBD)Each webinar will be held at 2 p.m. EST. For more information and to register: www.IDAresources.acf.hhs.gov/Calendar

  36. AFI Resource CenterContact Information Phone: 1-866-778-6037 Email: info@IDAresources.org Web: http://IDAresources.acf.hhs.gov http://acf.hhs.gov/programs/ocs/programs/afi

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