A unique partnership between a local credit union and a slew of East Side school districts could help low-income students in Silicon Valley do something many have only dreamed of — save up for college.
Excite Credit Union Chief Executive Officer Brian Dorcy this month announced the Step up Saving Program, a partnership between the credit union and the East Side Alliance, a group of eight East San Jose school districts, that allows children to begin saving money for higher education by making an initial investment and then matching those funds.
Several months in the making, the partnership provides children who live within the school districts’ boundaries the opportunity to open an education savings account beginning with an initial $50 deposit from the credit union to get the account set up.
Each year until the child’s 18th birthday, Excite will match a $25 contribution from the child’s family and provide a higher interest rate of 5 percent per year for up to $2,500.
The credit union launched a similar program earlier in the year and opened 800 new accounts, however, it wasn’t reaching the lower-income population it was hoping to attract, said John Hogan, Excite’s vice president of community relations.
By partnering with East Side Alliance and other nonprofits, Excite officials are hoping to target struggling students who need the boost to continue their education.
“We know that the product is attractive,” Hogan said. “We’re reaching a population that otherwise might not hear about it, or otherwise take advantage of it.”
If a family put in the minimum $25 per year when the child turns two, their total contribution would be $425 compared to the credit union’s contribution of $575, said Hogan. Through interest payments, the initial $50 contribution and bonus payments every five years, the ending balance would sit above $1,000, Hogan added. Students would also receive a milestone bonus when they turn 18.
In addition to the school districts, Excite is also partnering with area nonprofits to provide the opportunity to other vulnerable youth, including foster kids, across San Jose. Some of the nonprofit partners include Sunday Friends, Pivotal and Child Advocates of Silicon Valley.
The program was spurred, in part, by research that indicates that low-income youth with just $500 in a college savings account are four times more likely to finish college compared to low-income children without those savings.
“The real vision here is to get back to the credit union roots,” said Hogan. “The credit union’s job is to circulate money in the community — not extract.”
In addition to the Step Up Saving program, Excite also donated nearly 2,000 youth savings books to 2nd and 3rd grade teachers and students in East Side schools. It also sponsored the East Side Union High School District’s hall of fame dinner which recognizes graduates who have succeeded in a variety of fields.
“If you’ll pardon the pun, we’re excited to have Excite on board as a key partner in the East Side Alliance,” said Manny Barbara, an East Side Union High School District Education Foundation board member, in a statement. “Together, we can ensure that every student has the opportunity to fulfill their dreams.”
Dan Moser, the board’s president, added that most banks don’t encourage small accounts and Excite’s program helps families take those first manageable steps toward securing their children’s future.
“This allows a family to be able to save the money in a place that is providing interest on that,” said Moser. “That small amount has a tremendous effect on the family and youngster’s future.”
The new savings program is available to children and households affiliated with Excite Credit Union partner organizations. To learn more about the program, call (408) 979-5148.
Contact Carina Woudenberg at [email protected] or follow @carinaew on Twitter.