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Can Poor People Save for College?

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Can the poor save enough for college? Can you? Silly questions. The poor are poor, and even one percenters can't afford $60,000 tuitions without asking Popsi for a loan or drawing on an inheritance.

But a word about saving. It's worse than dieting. You go to a restaurant, order a big steak and leave half on the plate because your wife thinks you're fat. Portion control makes every meal miserable. Now, instead of steak, think paycheck. Spend only half of your paycheck and put the other half in a savings account. It's like portion control. Most of us try it, but don't follow-through.

But the poor do. Saving is their security. While you may have an unused line on your credit card for security, the poor have savings. Paradoxically, we can best observe what the poor save through data on their donations to others. Every year, immigrants save $100 billion dollars to send home to their countries. Every year, African Americans save $13 billion to give to their churches. Maryland's Prince Georges County, where African Americans comprise a majority, donates a greater percentage of its income than does New York's much tonier Westchester County. These savings come from millions of poor people.

Four years ago, I offered to pay half of the bonds of immigrants caught in a raid in New Bedford, Massachusetts. The bonds were so expensive, it seemed nearly impossible that families would be able to raise their halves. But 36 families took me up on the offer, bringing $130,000 to the courthouse to free their relatives. I had to match them, and learned the hard way that the poorest of the poor have savings.

Reflecting on the bonds and how the match provided an incentive for these low-income victims to contribute to their own savings, it made sense to apply the same concept to education. Could low-income families be induced to save toward higher education and learn enough about college access to work the system and get their children into college? Families United in Educational Leadership (FUEL) was founded in hopes of answering that question.

FUEL tells low-income families: we will match what you save up to a limit, we will invite you to savings circles where you can learn about college access and scholarships, and we will create an inviting atmosphere to make it all fun and inspiring. Everything is based on performance. You save, you get money. You come to the meetings consistently, you get to participate in raffle drawings for scholarships, laptops, turkeys, and cash. By the end of the program, most parents report that the biggest incentive is the college access curriculum (but no one turns away their raffle winnings!).

After three years, we have 400 families saving an average of $38 per month in nine sites across greater Boston. Sixty percent are meeting their savings and participation goals. The demographics are low-income, mostly inner city, minority families (which are increasingly immigrants and include many single parents). And yes, they struggle. The Latinos in our program must overcome some very grim statistics: lowest high school graduation rates, lowest attendance at four-year colleges, lowest college graduation rates and lowest presence in graduate schools. Overall, more than 200 Latino parents and students have been involved and we have graduated 80 Latino students from high school, nearly all of whom are continuing their college education.

At one graduation, I asked a group of 20 students in Lynn, Massachusetts how many of them had helped their parents save. Every hand went up. They helped when a parent lost a job, ran away to his or her home country, or fell into sickness or depression. Amidst this turmoil, the family found their college saving commitment a rock to which they could cling.

But do the families who participate in FUEL save enough? The average savings is $1,500, which is doubled through our match to become $3,000. It's not enough to pay for any college. But wait, the majority of FUEL parents earn only $30,000 per year, which they learn qualifies them for need-based aid. In fact, they can receive enough aid -- paired with their savings -- to send their children to most state schools. So the match is helpful, but the knowledge gain that FUEL offers is invaluable. Without programs like FUEL, this aid often goes to waste because it is not even applied for. And even worse, the great promise of financial aid is not understood by many parents, and is therefore not used to encourage children to study harder to get into school.

Returning to the original question -- can the poor save enough for college -- the answer is yes. At a time when student debt threatens to swamp the entire academic system, this is reassuring. The question as to whether you can actually save enough to pay for college outright, however, is no. Unless you sign on to portion control right now.