Citi Supports Initiative by State of Texas and RAISE Texas to Channel Child Support Payments Directly into 529 College Savings Plan

Today, Citi Community Development announced that it is collaborating with the State of Texas and RAISE Texas to pilot an innovative college savings program for underserved children in Texas who are dependent on child support payments. Entities from the private, public, and nonprofit sectors will join forces to make it possible for custodial parents to voluntarily convert all or part of lump-sum child support payments into college savings. The savings opportunity will be complemented by a financial coaching curriculum for parents. The program, which has strong potential for national replication, will be piloted in San Antonio, Austin and Bryan-College Station.

Texas, which runs the country’s largest child support payment system, collects and distributes $3 billion in child support payments statewide each year. Court-mandated child support payments are normally transferred on a monthly basis from non-custodial parents to the state through wage garnishments, and then transferred to custodial parents. However, it is not uncommon for payments to stop for a variety of reasons including job loss or incarceration. Successful resolution of such cases in arrears often results in lump-sum payments that can range from several hundred to many thousands of dollars.

Under the new program, custodial parents will be given the option of transferring these lump-sum payments into individual accounts established in The Texas College Savings Plan, Texas's 529 college savings plan. Non-custodial parents will also be informed of the program and will have the opportunity to make future contributions to the college savings account. As part of the program, a variety of incentive tactics, including matched savings dollars, will be tested to encourage and measure the participation rate.

“The national child support community supports the implementation of innovative partnerships that aim to improve educational outcomes for children of all families,” said David Stillman, President of the National Child Support Enforcement Association, which serves child support professionals, agencies, and strategic partners worldwide. “With many Texas children living in low-income families, a program like this can have a major impact in terms of making college education more possible.”

The college savings program will be facilitated by organizations associated with RAISE Texas, a statewide network of non-profit organizations, for-profit corporations, and public institutions focused on asset building for underserved families. RAISE Texas hopes to create 300 new college savings accounts with approximately $600,000 in savings in just one year.

“In addition to being able to conduct extensive outreach for this program, the members of our network have a tremendous capacity for financial counseling and education, including one-on-one coaching,” said Woody Widrow, Executive Director of RAISE Texas. “Our members will be able to amplify and deepen the impact of this program by making those opportunities available to participating parents.”

The Lyndon B. Johnson School of Public Affairs at the University of Texas will monitor and evaluate the program’s participation rates, outcomes and potential for scalability and replication. The program is intended to be replicated in at least ten states in the next three years.

“The partners on this program are taking an innovative approach to boosting college savings for children of unmarried parents, whose futures are often already at-risk,” said Dr. Cynthia Osborne, the chief University of Texas evaluator on the project and director of the Texas Child and Family Research Partnership. “We’re very interested to study this program as it is implemented statewide.”

The Texas pilot program is being launched with a $200,000 commitment from Citi Community Development.

“Removing barriers to higher education is a key part of Citi’s commitment to expanding financial inclusion,” said Mark Nerio of Citi Community Development. “Our experience in supporting college access and success has shown that it is critical to start saving for college early in a child’s life. Citi will continue to provide the resources necessary to make college savings a possibility for families of all income levels.”

About RAISE Texas

RAISE (Resources, Assets, investments, Savings, Education) Texas is a statewide network of non-profit organizations, for-profit corporations, and public institutions. RAISE Texas acts as a resource for local and state leaders as well as community organizations, helping them to offer asset-building training and assistance to Texas citizens. RAISE Texas also provides information for individuals and their families on asset-building activities within their communities. RAISE Texas believes that financial education and other asset-building activities leads to increased economic security. The organization also works to expand economic opportunity by supporting local, state and federal asset-building policies. For more information, visit www.raisetexas.org.

About Citi Community Development

Citi Community Development (CCD) is leading Citi’s commitment to achieve economic empowerment and growth for underserved individuals, families and communities by expanding access to financial products and services, and building sustainable business solutions and innovative partnerships. Our focus areas include: commercial and philanthropic funding; innovative financial products and services; and collaborations with institutions that expand access to financial products and services for low-income and underserved communities. For more information, visit www.citicommunitydevelopment.com.

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