Research on earlier state-backed child savings programs in Oklahoma and Maine suggests the new tax-deferred accounts could lift college expectations and long-term asset building, though balances alone may fall short of tuition costs.
The so-called Trump accounts, also known as 530A accounts, are set to open for registration and initial funding on July 4 under a U.S. program that includes $1,000 in automatic government seed funding for eligible children. Earlier state-backed child development account programs offer a long-term reference point for how such policies can affect saving behavior, educational expectations and asset accumulation. In Oklahoma, thousands of families were randomly selected in 2007 for the SEED OK college savings initiative, with about half of newborn participants receiving a $1,000 grant in an Oklahoma 529 account and the rest receiving no account or seed deposit. A 2021 analysis by the Center for Social Development at Washington University in St. Louis, which designed and implemented the project with the Oklahoma State Treasurer's Office, found positive effects including greater asset accumulation, stronger educational engagement and higher expectations among children and parents. The center also said lower-income households became more likely to save for future college costs. Jin Huang, co-director of the Center for Social Development, said the treatment group still held assets after 18 years and had built much more wealth than the comparison group. He estimated about 64% of participants in the experiment would enroll in college directly after high school, versus a typical Oklahoma rate of about 40%. Other states have run similar programs. Maine automatically awarded a $500 grant from the Alfond Scholarship Foundation to babies born on or after Jan. 1, 2013 through a 529 plan, and the National College Attainment Network said families receiving the grant were twice as likely to expect their child to attend college. Madeline Brown, senior policy associate at the Urban Institute, said dedicated college savings accounts can shift parental expectations and are now being used by students heading to college. Under the federal program, all parents or guardians with babies born between 2025 and 2028 who open a Trump Account will receive a $1,000 initial deposit from the U.S. Department of the Treasury. After launch, parents, guardians, grandparents and others can contribute up to $5,000 a year in after-tax dollars until the year before the beneficiary turns 18. Tech CEO Michael Dell said the initiative could mirror the broader benefits seen in earlier wealth-building programs, and he and Susan Dell committed $6.25 billion to provide an additional $250 seed deposit for children born between 2016 and 2024 who would not qualify for the Treasury contribution. TrumpAccounts.gov projects an account funded only by the initial $1,000 deposit could grow to about $6,000 by age 18, underscoring that the accounts may help build assets but are unlikely on their own to cover future college costs.