Applications for funding of up to $1,000,000 are currently being accepted for innovative projects that engage low-income students in financial education and encourage savings. The Assets for Independence program of the U.S. Department of Health and Human Services supports the creation of Individual Development Account (IDA) matched savings programs, where students’ savings are matched at up to an 8-to-1 rate.
Upon enrolling with an Assets for Independence program grantee, students deposit money from earned income each month into their IDA. Students receive a ‘match’ on their monthly deposits to incentivize saving. For example, a student who deposits $50 can earn a match of up to $400. While they are saving, students complete financial education classes, college counseling, and career planning.
The IDA funds can be used to cover the cost of tuition, fees, books, supplies, and equipment required for degree or non-degree courses. The matching funds are considered a gift, with no expectation of repayment. With a minimum savings period of six months, students can be eligible to use the funds as soon as the following semester after program enrollment. Savings in Assets for Independence-funded IDAs are not counted as assets for determining eligibility for federal aid programs.
Utilizing an IDA reduces the out-of-pocket costs of college and also the amount of loans a student may borrow. In addition, the financial education component of an IDA gives students the knowledge and skills to manage their household budgets and develop emergency funds to fall back on in times of crisis. Thus, an Assets for Independence program may help with retention and degree completion rates at your institution.
Three categories of entities can apply for grants from the Assets for Independence program to run IDA projects:
Other types of entities can apply in partnership with a 501(c)3 non-profit organization. Grant recipients are required to finance their projects with a combination of the Federal AFI grant and cash from non-Federal sources. Some colleges and universities have had success redirecting existing scholarship funds for this purpose.
Publication Date: 2/6/2012