Bill to Expand IDAs Introduced in the House
Improvements to Assets for Independence Act Will Enable Low-Income Families to Increase their Financial Security & Wealth
Washington. D.C. — A bill that will make it easier to offer matched savings accounts and financial education to low-income Americans was applauded today by Prosperity Now, a national organization dedicated to expanding economic opportunity for all Americans.
The Stephanie Tubbs Jones Assets for Independence Improvement Act (H.R. 1623) will reauthorize and improve the Assets for Independence Act, the largest Federal grant program for individual development accounts (IDAs) and the primary source of funding for the IDA field.
Introduced Friday, April 15 by Congressman John Lewis (D-GA) and 24 original cosponsors, H.R. 1623 would enable social service programs and partnerships to continue providing matched savings and financial education as a component of their assistance to low-income families. Since its inception, the Assets for Independence (AFI) program has successfully enabled tens of thousands of low-income Americans across the country towards purchasing their first home, starting a business, or pursuing post-secondary education or training.
Prosperity Now believes that in order to respond to current economic realities (limited state budgets, reduced philanthropic grants, consolidation of the financial sector, higher required levels of collateral for home and small business loans, etc.), Congress must reauthorize and improve the AFI program.
Improvements to the Assets for Independence program include these changes:
- Lower the non-federal matching funds requirement from 100% of federal funds to 50% of federal funds. State budget crises and the challenging economic environment have made it more difficult to raise the required local match; this bill will ease that burden.
- Allow tribes and local governments to apply for AFI grants independently. Current law mandates that applicants partner with a nonprofit organization, which are not always present.
- Align the program's eligibility guidelines with other programs to simplify the application process. Households would qualify if their income is either below 80% of Area Median Income or below 200% of the federal poverty level. Also, this change enables individuals in high-cost areas to participate.
- Raise the maximum match amount that participating families can receive from $2,000 to $5,000 for single AFI participants and from $4,000 to $10,000 for married couples. This will ensure that AFI accounts keep pace with inflation and the rising costs of housing and education.
"Congressman Lewis has long championed proven strategies to increase low-income families' financial security," said Prosperity Now President Andrea Levere. "We thank him for his ¬¬leadership on providing a wealth-building strategy for those neglected by our current asset-building policies. Of our $400 billion national asset-building budget, the $25 million AFI program is one of the few policies that reaches low-income families and enables them to build wealth."
To find out more about the importance of Individual Development Accounts, and other policies that encourage household savings, please visit our IDAs page.