U.S. SAVINGS 

BONDS

Future of Offering 

Paper Savings Bonds 

at Tax Time Is 

Uncertain, and LowerIncome Households 

Continue to Face 

Savings Challenges

Report to Congressional Requesters

July 2015

GAO-15-563

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-15-563, a report to 

congressional requesters

July 2015 

U.S. SAVINGS BONDS

Future of Offering Paper Savings Bonds at Tax Time 

Is Uncertain, and Lower-Income Households 

Continue to Face Savings Challenges

Why GAO Did This Study

U.S. savings bonds provide Americans 

with an affordable way to save. In 

2012, Treasury stopped selling paper 

savings bonds at banks as part of its 

broader electronic initiative. As a 

result, savings bonds generally must 

be purchased through TreasuryDirect®

You requested that GAO examine 

Treasury’s savings bond program, 

including the accessibility of 

TreasuryDirect, and other savings 

programs. This report examines (1) the 

effect of Treasury’s elimination of 

paper U.S. savings bonds on the 

program and bond purchases, (2) the 

extent to which the Tax Time Savings 

Bond program has promoted savings 

by lower-income households and 

Treasury’s future plans for the 

program, and (3) the extent to which 

lower-income households are saving

and programs developed by federal 

agencies and others. GAO reviewed 

agency rules and other documents; 

analyzed Treasury, Internal Revenue 

Service, and other data, in part using 

economic models; and interviewed 

federal, state, and nonprofit entities

and experts involved in savings 

programs. 

. 

The one exception is the Tax Time

Savings Bond program, established in 

2010 to enable taxpayers to use their 

tax refund to buy paper savings bonds. 

The program is one way for lowerincome families to save. 

What GAO Recommends

GAO recommends that as Treasury 

implements the TRIM system, it 

consider the benefits and costs of the 

Tax Time program in future decisions 

on whether to extend the program. 

Treasury agreed with GAO’s

recommendation.

What GAO Found

The Department of the Treasury’s (Treasury) elimination of paper savings bonds 

made buying bonds more difficult for some customers, but GAO’s analyses 

generally indicated that the decline in bond purchases after the change was not 

statistically significant. Treasury eliminated paper savings bonds in January 

2012, after a long-term decline in savings bond purchases. It estimated the 

change would save about $70 million in program costs from 2012 through 2016. 

Except for the Tax Time Savings Bond program, customers who want to buy 

savings bonds must use TreasuryDirect—an online system that requires users to 

have Internet access and a bank account. Customers without both, which likely 

includes lower-income households, face challenges accessing TreasuryDirect.

Treasury is in the early stages of developing a new system, the Treasury Retail 

Investment Manager (TRIM), to make it easier to buy savings bonds, such as by 

using a mobile device, which often is the primary means of accessing the Internet 

for many lower-income households. 

A little more than one-third of the users of Treasury’s Tax Time Savings Bond 

program—the only way to purchase paper bonds—were lower-income tax filers 

(filers with an adjusted gross income of $25,000 or less), but the program’s future 

is uncertain. Since 2010, tax filers have been able to use a tax form to buy paper 

savings bonds with their tax refund. For tax years 2010 through 2013, about 

142,000 tax filers (less than 1 percent of tax filers receiving refunds) used at least 

part of their tax refund to buy nearly $72.5 million in savings bonds. Of these 

filers, about 55,000 had incomes of $25,000 or less and bought about $13.7 

million in savings bonds, or about $250, on average, per filer each year. Treasury 

has been extending the program partly because the amount of bonds purchased 

and participation levels indicate that the program is providing benefits, but it 

generally has not considered the program’s costs. In May 2015, Treasury officials 

told GAO that they plan to continue to extend the program until TRIM can provide 

a suitable electronic alternative. Because TRIM will require Internet access by 

computer or mobile device, Tax Time program users without such access may no 

longer be able to save by buying bonds with their refunds after TRIM is 

implemented. In prior work on agency stewardship of public funds, GAO reported 

that agencies, as a best practice, should consider both benefits and costs in 

considering alternatives related to program decisions. Without considering both, 

Treasury cannot make a fully informed decision on whether to discontinue the

Tax Time program when an electronic alternative is available. 

On the basis of GAO’s analysis of data from the most recent Survey of 

Consumer Finances conducted in 2013, the median value of financial assets held 

by the bottom fifth of income earners (whose median annual income was 

$14,200) was $550. Given the limited savings of lower-income households and 

savings challenges faced by such households, a number of federal agencies

have developed programs to promote savings. For example, Treasury’s myRA®

, 

which is in a soft-launch phase, promotes retirement savings for individuals 

without access to employer-sponsored retirement plans. State, local, and 

nonprofit agencies also have initiated programs that promote savings for 

retirement, child development, or emergencies and generally target lower-income

households. Eligibility requirements and participation vary by program. 

View GAO-15-563. For more information, 

contact Cindy Brown Barnes at (202) 512-

8678 or brownbarnesc@gao.gov. 
Page i GAO-15-563 Savings Bonds 

Letter 1

Background 4

Treasury Eliminated Paper Savings Bonds to Reduce Costs but 

Created Challenges for Some Savings Bond Investors 5

Tax Time Program Promotes Savings, but Treasury Has Not 

Considered Costs Along with Benefits in Its Annual Decisions to 

Extend the Program 12

Savings by Lower-Income Households Are Limited but Federal 

Agencies and Other Entities Have Created Savings Programs 18

Conclusion 35

Recommendation for Executive Action 36

Agency Comments 36

Appendix I Objectives, Scope, and Methodology 39

Appendix II Comments from the Department of the Treasury 43

Appendix III GAO Contact and Staff Acknowledgments 44

Tables

Table 1: Number of Tax Filers Purchasing Savings Bonds through 

the Tax Time Savings Bond Program and Amounts 

Purchased, Tax Years 2010-2013 14

Table 2: Number and Percentage of Tax Filers Purchasing Paper 

Savings Bonds through the Tax Time Program and 

Receiving the Earned Income Tax Credit, Tax Years 

2010-2013 15

Table 3: 2013 Survey of Consumer Finances Holdings of Financial 

Assets by Household Income 19

Table 4: Assets for Independence Grant Awards and Budget 

Authority for Fiscal Years 2010-2014 25

Figures

Figure 1: Purchases of U.S. Savings Bonds from 2001 through 

2013 (in 2014 Dollars) 6

Contents
Page ii GAO-15-563 Savings Bonds 

Figure 2: Percentage of U.S. Households Holding Savings Bonds 

from 2001 through 2013 7

Figure 3: 2001 to 2013 Survey of Consumer Finances Median 

Holdings of Financial Assets, Excluding Retirement 

Accounts 20

Figure 4: HUD Family Self Sufficiency Program Escrow Account 

Example 27

Abbreviations

FDIC Federal Deposit Insurance Corporation

FLEC Financial Literacy and Education Commission

HUD Department of Housing and Urban Development

IRS Internal Revenue Service

SCF Survey of Consumer Finances

Treasury Department of the Treasury

TRIM Treasury Retail Investment Manager 

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Page 1 GAO-15-563 Savings Bonds 

441 G St. N.W.

Washington, DC 20548

July 16, 2015

Congressional Requesters

In 2013, Treasury issued about $686 million in U.S. savings bonds, which 

historically have provided Americans with an affordable and safe way to 

save and invest. However, fewer than 5 percent of lower-income 

households owned savings bonds that same year. Additionally, savings 

bond purchases have declined significantly from 2001 to 2013. Savings 

bonds are low risk, backed by the full faith and credit of the U.S. 

government, and offered in minimum denominations as low as $25. 

Beginning in January 2012, the U.S. Department of the Treasury 

(Treasury) discontinued the over-the-counter sale of paper savings bonds 

at financial institutions as part of its agency-wide, all-electronic effort 

announced in 2010. As a result, savings bonds generally can be 

purchased only through Treasury’s Internet-based system, called 

TreasuryDirect®. Treasury stated that its goal in discontinuing sales of 

paper savings bonds was to reduce costs and enhance customer service 

by increasing electronic transactions. At the same time, some members 

of Congress, nonprofit organizations, and others have raised concerns 

that the change has reduced access to an important savings product, 

particularly for lower-income households who may not have bank 

accounts, access to the Internet, or the knowledge or skills needed to use 

TreasuryDirect. In 2010, the Internal Revenue Service (IRS) provided tax 

filers with an alternative method for purchasing paper savings bonds by 

enabling them to use their income tax refund to buy them through a 

program commonly known as the Tax Time Savings Bond program. This 

program is intended, in part, to help lower-income households to save. In 

addition to this program, federal agencies, state agencies, and nonprofit 

organizations have developed an array of savings or asset-building 

programs, many of which target lower-income households.

You asked us to review issues related to Treasury’s savings bond 

program and study other programs that promote savings by lower-income 

households. This report examines (1) the effect of Treasury’s elimination 

of paper U.S. savings bonds, including on the savings bond program and 

bond purchases; (2) the extent to which Treasury’s Tax Time Savings 

Bond program has promoted savings, particularly by lower-income 

households, and Treasury’s plans for the program’s future; and (3) the 

extent to which lower-income households are saving using financial 

Letter
Page 2 GAO-15-563 Savings Bonds 

products, and some of the government and nonprofit programs that have 

been developed to promote savings by lower-income households.

To examine the effect of Treasury’s elimination of paper U.S. savings 

bonds, including on the savings bond program and bond purchases, we 

analyzed Treasury’s data on savings bond purchases from 2001 through 

2013. Specifically, to analyze long-term trends in savings bond purchases 

and more recent trends since the end of paper sales in January 2012, we 

estimated two econometric models. We also reviewed Treasury 

documentation, including estimates of cost savings from eliminating paper 

savings bonds, budgets and capital investment plans, and TreasuryDirect 

materials. We interviewed Treasury officials to discuss its savings bond 

program, including the benefits and costs of eliminating paper savings 

bonds, concerns that had been raised about TreasuryDirect, and plans for 

replacing TreasuryDirect.

To determine the extent to which Treasury’s Tax Time Savings Bond 

program has promoted savings, we used aggregated data provided by 

IRS on income tax filers who used at least part of their tax refunds to buy 

paper savings bonds from 2010 through 2013. We used the data to 

determine the number of tax filers who bought paper savings bonds, 

including those with adjusted gross incomes of $25,000 or below, and the 

amount of savings bonds they purchased. We also reviewed IRS 

documentation, including IRS Form 8888, Allocation of Refund (Including 

Savings Bond Purchases. We interviewed Treasury and IRS officials 

about the Tax Time program’s operations, benefits, and costs. In addition, 

we interviewed nonprofit organizations that had promoted savings bonds 

as a savings vehicle or collaborated with Treasury on efforts to improve 

access to financial products and services about the benefits of the 

program.

To examine the extent to which lower-income households are saving 

using financial products, we used data from the Survey of Consumer 

Finances (SCF) issued by the Board of Governors of the Federal Reserve 

System for survey years 2001, 2004, 2007, 2010, and 2013 to estimate, 

among other things, the percentage of U.S. households holding financial 

assets, including U.S. savings bonds, and the median value of such 
Page 3 GAO-15-563 Savings Bonds 

financial assets held by U.S. households.1 We chose these survey years 

because they covered more than 10 years before the discontinuation of 

the sale of paper savings bonds at financial institutions but also one year 

after the change. To identify and describe the government and nonprofit 

programs developed to promote savings by lower-income households, we 

conducted research on and reviewed select federal, state, local, and 

nonprofit programs targeting either long-term (such as retirement or asset 

accumulation) or short-term savings goals for lower-income households. 

We also interviewed officials from six federal agencies involved in the 

Financial Literacy and Education Commission, state and local 

government agencies, and nonprofit organizations and academics 

focusing on savings and asset-building programs.2

We assessed the reliability of the data we used in each of the three 

objectives by reviewing documentation, such as Treasury’s description of 

the data in the monthly statement of public debt, SCF codebooks, and 

Federal Reserve bulletins on the SCF. We also interviewed 

knowledgeable officials, and conducted testing on relevant data fields 

where applicable, such as the number of tax filers participating in the Tax 

Time program and amounts of savings bonds purchased. We found the 

data we reviewed to be sufficiently reliable for the purposes of our 

analyses.

We conducted this performance audit from August 2014 to July 2015 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

 

1

The Federal Reserve Board’s SCF is a triennial cross-sectional survey of families in the 

United States. The survey data include information on families’ balance sheets, pensions, 

income, investments, and demographic characteristics. The most recent survey was 

conducted in 2013. For purposes of this report, we define lower-income households in the 

context of SCF data as those households whose income falls in the bottom 40 percent. 

The range of income for this category of households in the latest survey conducted in 

2013 was from $0 to $36,523 and the average household income was about $21,000.

2

The Financial Literacy and Education Commission was created in 2003 as a multiagency 

commission to coordinate among federal agencies and between federal agencies and 

state, local, nonprofit, and private entities related to financial literacy initiatives. Twentytwo federal entities are members of the commission, with the Treasury Secretary serving 

as the chair and Consumer Financial Protection Bureau Director serving as the vice chair. 
Page 4 GAO-15-563 Savings Bonds 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Treasury has issued savings bonds since 1935. Savings bonds offer 

investors the ability to purchase securities with lower minimum 

denominations than those for marketable Treasury securities.3 When 

individuals purchase savings bonds, they loan the amount they paid for 

the bonds to the U.S. government. Over a period of time (up to 30 years), 

the savings bonds earn interest and, after 12 months of their original 

purchase, can be cashed in for their purchase price, plus the interest they 

have earned, subject to a 3-month interest penalty during the first 5 years. 

Over the years, Treasury has offered a number of savings bonds with 

different terms and interest rates. Currently, Treasury offers Series EE 

bonds, which have a fixed interest rate, and Series I bonds, which pay an 

interest rate that is tied to inflation.4

The Bureau of the Fiscal Service, one of Treasury’s 10 bureaus, helps to 

fund the federal government by selling Treasury securities, including 

savings bonds. Treasury Securities Services within the bureau operates 

Treasury’s Retail Securities program, which allows retail investors to 

purchase savings bonds and marketable securities in electronic form 

directly from Treasury. The office’s flagship system is TreasuryDirect, an 

online proprietary system created in 2002 that allows customers to buy 

and hold savings bonds and marketable securities, and to manage their 

accounts without assistance from a customer service representative. 

TreasuryDirect customers can purchase securities at any time, direct 

electronic payments to bank accounts, and convert paper savings bonds 

to electronic savings bonds in the same series and with the same issue 

date. TreasuryDirect customers also can set up payroll deductions and 

Savings bonds do not represent a 

major source of funds for the Treasury.

 

3

Most of the securities that Treasury issues to the public are marketable, meaning that 

once the government issues them they can be resold by whoever owns them. Marketable 

debt consists of bills, notes, and bonds. Currently, Treasury issues bills with maturities 

ranging from a few days to 52 weeks; notes with maturities of 2, 3, 5, 7, and 10 years; 

bonds that mature in 30 years; Treasury Inflation-Protected Securities with maturities of 5, 

10, and 30 years; and Floating Rate Notes that mature in 2 years.

4

For Series EE bonds, issued since May 2005, the interest rate is determined by taking 

the market yields of the 10-year Treasury Note and adjusting that by the value of 

components unique to savings bonds, including options that permit early redemption 

(redemption after the first 12 months) and tax deferral.

Background
Page 5 GAO-15-563 Savings Bonds 

automatically recurring purchases. As of March 2015, TreasuryDirect had 

around 580,700 accounts that were funded and held nearly $27 billion.5

The elimination of paper savings bonds reduced program costs but made 

purchasing bonds more difficult for some savers. However, our analysis 

of Treasury’s bond data showed that the drop in bond purchases after the 

elimination of paper savings bonds was not statistically significant. As 

shown in figure 1, annual purchases of U.S. savings bonds declined 

significantly from 2001 through 2013, falling from around $14.6 billion to 

less than $1 billion, or by more than 90 percent.6

 

5

The number of funded TreasuryDirect accounts is a snapshot of the number of accounts 

containing one or more savings bonds or marketable securities on a particular date.

Over this period, 

savings bond purchases declined every year, except from 2002 to 2003. 

Likewise, the role of savings bonds in helping to fund the federal debt 

also declined over the period, accounting for about 3.2 percent of the 

federal debt in 2001 and about 1.0 percent in 2013.

6

We adjusted the monthly savings bonds purchased for inflation using the consumer price 

index, with June 2014 as the base month, before aggregating purchases by year.

Treasury Eliminated 

Paper Savings Bonds 

to Reduce Costs but 

Created Challenges 

for Some Savings 

Bond Investors
Page 6 GAO-15-563 Savings Bonds 

Figure 1: Purchases of U.S. Savings Bonds from 2001 through 2013 (in 2014 Dollars)

Note: We adjusted the monthly savings bonds purchased for inflation using the consumer price index, 

with June 2014 as the base month, before aggregating purchases by year.

Consistent with the decline in savings bond purchases, the percentage of 

U.S. households holding savings bonds and the amount of savings bonds 

these households hold also have declined. On the basis of data from the 

Federal Reserve Board’s SCF, we found that around 17 percent of 

households held savings bonds in 2001, with a median value of $1,300 

for those who held them (fig. 2). In 2013, around 10 percent of 

households held savings bonds with a median value of $1,000 for those 

who held them.7 Moreover, savings bonds as a percentage of total 

financial assets held by U.S. households declined from 0.7 percent to 0.3 

percent over the same period.

 

7

In 2001, the 95 percent confidence interval on median savings bonds held, conditional on 

holding any, was $1,226 to $1,401. In 2013, it was $817 to $1,183. 
Page 7 GAO-15-563 Savings Bonds 

Figure 2: Percentage of U.S. Households Holding Savings Bonds from 2001 through 

2013

Following the long-term decline in savings bond purchases, Treasury 

stopped selling paper savings bonds through over-the-counter channels, 

including through financial institutions and mail-in orders, on January 1, 

2012, as part of its agency-wide electronic initiative to reduce program 

costs and improve customer service. According to Treasury officials, the 

agency phased out the issuance of paper savings bonds through 

employer-sponsored payroll savings plans in 2010, and the ending of 

savings bond sales through over-the-counter channels was the last step 

of discontinuing paper savings bonds. Treasury estimated that the 

elimination of over-the-counter sales of paper savings bonds would save 

nearly $70 million in program costs from 2012 through 2016. Treasury 

calculated these savings by estimating how much it would save in costs 

associated with issuing new paper bonds and servicing and redeeming 

existing paper bonds, which include fees paid to banks, postage, and 

printing. For example, Treasury estimated that the change would 

eliminate around $14.5 million in fees paid to financial institutions for 

issuing and redeeming savings bonds and around $12.7 million in 

postage expenses for mailing paper bonds to customers over the 5-year 

period. Additionally, Treasury estimated that it would save in personnel 

costs because fewer employees would be needed to process customer 

Treasury Eliminated Paper 

Savings Bonds to Reduce 

Program Costs and 

Provide Other Benefits
Page 8 GAO-15-563 Savings Bonds 

service transactions. According to Treasury’s estimates, the change 

would save around $4.9 million in compensation and benefit costs for 

Treasury staff and $28.5 million in Federal Reserve Bank personnel costs 

over the 5-year period. Finally, Treasury estimated $9 million in savings 

from reductions in paper stock, overhead, forms, and other costs.

In addition to the cost savings, Treasury expected the change to provide 

customer benefits, such as increased security and convenience. Although 

paper bonds allowed buyers to purchase savings bonds at financial 

institutions, Treasury’s online system for purchasing savings bonds and 

other Treasury securities—TreasuryDirect—allows customers to buy, 

manage, and redeem savings bonds electronically at any time. Treasury 

officials told us that electronic bonds are safer and more secure, because 

paper bonds could be lost, stolen, altered, or fraudulently redeemed. 

Treasury officials also added that electronic bonds provide the agency 

with both operational advantages and enhanced customer experience, 

since Treasury can automatically track bond purchases, redemptions, and 

values for the customer.

When Treasury eliminated paper savings bonds, it created access 

challenges for bond buyers who do not have a bank account and Internet 

access. Customers now must use TreasuryDirect to purchase electronic 

savings bonds, although some can purchase paper savings bonds 

through the Tax Time program, which we discuss later in this report. To 

open a TreasuryDirect account, a customer generally must have both 

Internet access and a bank account. While TreasuryDirect can be 

accessed through cellular phones and other mobile devices, the website 

is not optimized for such use. According to representatives from a 

nonprofit organization that focuses on savings for lower-income 

households, mobile access is the primary means of Internet access for 

some lower-income consumers. According to 2011 Census Bureau data, 

around 50 percent of households with less than $25,000 in income did not 

have computer-based Internet access from some location.8

 

8

Households earning less than $25,000 were the lowest household income category for 

which Census data were reported on computer and Internet usage. 

Further, 

according to the 2013 Federal Deposit Insurance Corporation’s (FDIC) 

National Survey of Unbanked and Underbanked Households, 7.7 percent 

of U.S. households, or nearly 9.6 million households, were unbanked—

Eliminating Paper Savings 

Bonds Has Created 

Challenges for Some 

Bond Buyers
Page 9 GAO-15-563 Savings Bonds 

that is, they did not have a bank account at an insured institution.9

Treasury officials recognized the access challenges related to 

TreasuryDirect that some potential users might face, but told us such 

challenges could be mitigated. Treasury officials said that they worked 

with organizations that provided Internet access to the public, such as 

libraries and community centers, and determined that such organizations 

provide the level of Internet access required for potential TreasuryDirect 

users. The officials also told us that in lieu of a bank account, individuals 

could use reloadable debit cards to purchase and redeem savings bonds 

through TreasuryDirect. While the use of such cards provides an avenue 

for those without a traditional bank account to purchase savings bonds, 

Treasury estimated that few savings bonds, approximately 1,426, had 

been purchased using prepaid debit cards from mid-April 2005 through 

mid-November 2014. Further, Treasury officials told us that unbanked 

individuals could use the Tax Time program to purchase paper savings 

bonds. Our analysis of IRS data on the Tax Time program indicates that 

around 91 percent of tax filers who used part of their tax refund to 

purchase paper savings bonds had part of their refund directly deposited 

into a bank account. Similarly, based on data from SCF surveys from 

2001 through 2010, over 90 percent of households who owned savings 

bonds have bank accounts. Additionally, according to FDIC’s survey, 

more than 90 percent of all households the agency surveyed had a bank 

account.

As a 

result, such households or individuals may not be able to access 

TreasuryDirect or complete a transaction if they wanted to buy savings 

bonds.

According to Treasury officials and representatives from several nonprofit 

organizations that we interviewed, TreasuryDirect also poses some 

usability challenges. For example, Treasury officials and nonprofit 

representatives told us that giving savings bonds as a gift through 

TreasuryDirect can be a cumbersome process. They explained that 

TreasuryDirect requires the individual buying the savings bond to have

the Social Security number and TreasuryDirect account number of the 

recipient of the gift bond, information the individual may not know. The 

gifting process also requires the recipients or their parents or guardians to 

set up a TreasuryDirect account, if they do not have one. Treasury 

 

9

FDIC, 2013 FDIC National Survey of Unbanked and Underbanked Households 

(Washington, D.C.: October 2014). 
Page 10 GAO-15-563 Savings Bonds 

officials told us that issues associated with the process of buying bonds 

as gifts were the source of the most common complaints from customers 

about savings bond transactions through TreasuryDirect. In addition, 

representatives from nonprofit organizations and an academic we 

interviewed told us that TreasuryDirect generally was not a user-friendly 

system, even for individuals who were comfortable using the Internet for 

their financial transactions. They told us that navigating the system was 

not easy and could pose challenges to potential customers who were not 

familiar with online financial transactions. Similarly, Treasury officials told 

us that customers anecdotally had expressed concerns about difficult 

navigation, lengthy application pages, organization of information, 

security features, complicated linked accounts processes, and difficulty 

locating tax reporting information. When Treasury eliminated paper 

savings bonds in January 2012, there were nearly 379,000 total funded 

TreasuryDirect accounts.10

Our analyses of Treasury savings bond data indicated that the decline in 

savings bond purchases after Treasury discontinued the sale of paper 

savings bonds in January 2012 was consistent with the overall long-term 

decline in savings bond purchases. In addition, the decline since January 

2012 generally was not statistically significant based on models we 

estimated. While there was a large decline in purchases in 2012 and 

2013 when sales of paper savings bonds were discontinued, there are a 

number of factors that could account for this decline. For example, 

savings bond purchases declined in 9 out of 10 years from 2002 to 2011, 

and some declines were quite large, hence recent declines in purchases 

may be reflective of long-term trends. In addition, we found that savings 

bond purchases have been sensitive to interest rate changes, with savers 

typically purchasing more when interest rates are higher and purchasing 

less when they are lower. The low interest rates in recent years may 

account for some of the decline in savings bond purchases.

As of the end of March 2015, there were over 

580,000 total funded TreasuryDirect accounts, but the extent to which the 

increase resulted from savings bond investors has not been determined.

Although lower-income households that do not have bank accounts or 

Internet access could face challenges accessing or using TreasuryDirect, 

 

10The number of funded TreasuryDirect accounts is a snapshot of the number of accounts 

containing one or more savings bonds or marketable securities on a particular date. The 

date for this snapshot is December 31, 2011, which was just before Treasury discontinued 

the sale of paper savings bonds in January 2012. 

Decline in Purchases after 

the Elimination of Paper 

Savings Bonds Is 

Consistent with Long-Term 

Trends, and Treasury Is 

Addressing Access and 

Usability Challenges
Page 11 GAO-15-563 Savings Bonds 

this challenge may only affect a small percentage of such households. 

Our analyses indicate that a small percentage of such households buy 

savings bonds in general, even when they were available in paper form. 

According to data from the 2013 SCF survey, 4.6 percent of lower-income 

households held savings bonds in 2013, and this percentage had 

declined from 7.7 percent in 2001.

In a July 2014 Federal Register release, and in support of its strategy to 

reach new customers, develop new product delivery streams, and 

increase the number of available product offerings, Treasury released its 

plans to introduce the Treasury Retail Investment Manager (TRIM), which 

will replace TreasuryDirect.11

According to Treasury officials, they also are exploring ways for TRIM to 

simplify the process for buying savings bonds as gifts and to allow for 

multiple funding options. One option under consideration is for a customer 

to buy a savings bond gift certificate that can be given to another 

individual, who can go online to open a TRIM account and use the 

certificate to buy the savings bond directly. Treasury also is exploring 

multiple funding options for customer accounts to provide options to 

savers who do not have bank accounts.

According to Treasury officials, TRIM will be 

more flexible and responsive to changing business and digital investing 

needs. Treasury officials told us that they plan to offer mobile phone 

access through TRIM, which could improve access for households that do 

not have computer-based Internet access at home. Treasury officials also 

told us that TRIM would attempt to address a number of TreasuryDirect’s 

usability challenges. For example, Treasury officials told us that the TRIM 

system should be more user friendly for customers, because it will have 

an online interface that is similar to the online interfaces that banks and 

stock brokers offer and with which most customers are likely familiar. The 

system also is expected to streamline various steps for customers 

navigating the system—for example when they open or sign into 

accounts—to improve usability and potentially save Treasury money by 

reducing calls to customer service.

As of May 2015, TRIM was under development, and Treasury officials 

told us that its release date had not been set. According to Treasury 

officials, TRIM is being developed in four phases—initiation, planning, 

 

11Proposed Collection of Information: TreasuryDirect System, 79 Fed. Reg. 44,491 (July 

31, 2014).
Page 12 GAO-15-563 Savings Bonds 

execution, and closing. Treasury officials told us that TRIM was in the 

planning phase and that the system’s design was being developed. 

Specifically, Treasury officials are working on defining technical 

requirements for the system. Before TRIM can be implemented, Treasury 

will need to complete the execution and closing phases, which include 

technical design, system coding, various testing, consumer education, 

and system documentation. Treasury officials told us that they did not 

have a specific release date for TRIM, which will depend on the time 

needed to complete the next steps in the project plan. According to a 

Treasury estimate issued in 2013, TRIM was expected to cost around $18 

million to develop and implement. Treasury officials told us that, as of 

May 2015, they did not have any changes to this estimate and that the 

costs they had incurred thus far had been consistent with the estimate. 

They also told us that Treasury had tentative plans to develop an 

implementation plan for TRIM by April 2016.

Since 2010, U.S. tax filers have used the Tax Time program to save by 

using their tax refund to purchase paper savings bonds. For example, 

about 55,000 tax filers with adjusted gross incomes of $25,000 or less 

participated in the program for tax years 2010 through 2013 and bought 

about $13.7 million in savings bonds. Treasury has been extending the 

program annually in consideration of some of the program’s benefits, but 

not in consideration of the program’s costs.

Tax Time Program 

Promotes Savings, 

but Treasury Has Not 

Considered Costs 

Along with Benefits in 

Its Annual Decisions 

to Extend the 

Program
Page 13 GAO-15-563 Savings Bonds 

Since 2010, U.S. tax filers have been able to use their tax refund to 

purchase paper savings bonds through the Tax Time Savings Bond 

program. In 2009, President Obama proposed a package of initiatives to 

spur increased savings that included a provision for purchasing savings 

bonds with tax returns. Under the Tax Time program, tax filers receiving a 

tax refund may use an IRS form to allocate their refund among several 

options, such as purchasing paper savings bonds or depositing their 

refund directly into their bank account.12 As shown in table 1, in tax years 

2010 through 2013 about 142,000 total tax filers used the Tax Time 

program to buy a total of about $72.5 million in paper savings bonds.13

 

12IRS Tax Form 8888 Allocation of Refund (Including Savings Bond Purchases) allows tax 

filers to directly deposit their refund to either two or three accounts at a bank or other 

financial institution (such as a mutual fund, brokerage firm, or credit union) in the United 

States, and to use at least part of the refund to purchase up to $5,000 in Series I paper 

savings bonds.

(According to data provided by Treasury, of the 142,000 total tax filers 

that used the Tax Time program, about 20 percent were repeat 

participants in the program). These filers purchased, on average, 

approximately $500 in paper savings bonds each year. Table 1 also 

shows that about 55,000 tax filers with an adjusted gross income of 

$25,000 or less collectively bought about $13.7 million in paper savings 

bonds. These filers purchased, on average, approximately $250 in paper 

savings bonds each year. At the same time, the number of tax filers 

participating in the Tax Time program and the amount of savings bonds 

purchased under the program were relatively small. The total number of 

tax filers receiving a refund for tax years 2010 through 2013 was more 

than 100 million in each year, and Tax Time participants made up less 

than 1 percent of this group. Similarly, the amount of savings bonds 

purchased through the program from 2010 through 2013 accounted for 

about 1 percent of the total amount of all savings bonds purchased during 

those years.

13We calculated the total number of tax filers using the Tax Time program by aggregating 

IRS data on the total number of tax returns filed for tax years 2010 through 2013, for a 

total of 142,119. Since about 20 percent of tax filers participated in the program in more 

than 1 year, the number of unique tax filers is less than this amount. 

Tax Time Savings Bond 

Program Promotes 

Savings through the 

Purchase of Paper 

Savings Bonds, Including 

by Lower-Income 

Households
Page 14 GAO-15-563 Savings Bonds 

Table 1: Number of Tax Filers Purchasing Savings Bonds through the Tax Time 

Savings Bond Program and Amounts Purchased, Tax Years 2010-2013

Tax year

a

Total number of 

tax filers 

purchasing 

paper savings 

bondsb

Total amount 

of paper 

savings 

bonds 

purchased

Number of tax 

filers with an 

adjusted gross 

income of $25,000 

or less 

purchasing paper 

savings bondsb

Amount of paper 

savings bonds 

purchased by tax 

filers with an 

adjusted gross 

income of $25,000 

or less

2010 32,449 c $11,524,200 13,724 $3,151,371

2011 39,417 21,565,850 15,280 3,715,089

2012 36,263 21,537,450 13,369 3,493,656

2013 33,990 d 17,845,500 12,655 3,297,552

Total 142,119 $72,473,000 55,028 $13,657,668 

Source: GAO analysis of IRS data. l GAO-15-563

a

Since Tax Time program data for tax year 2014 would not be available until after the 2015 tax filing 

season, the latest tax year for which we obtained Tax Time program data was 2013.

b

We calculated the number of tax filers for these categories by aggregating IRS data on the total 

number of tax returns filed for tax years 2010 through 2013. Since some tax filers participated in the 

program in more than one year, the number of unique tax filers is less than the total provided in this 

table.

c

For tax year 2010, IRS had data only on the amount of paper savings bonds tax filers asked to 

purchase and not the actual purchase figures. IRS officials explained that in almost all cases, the 

requests went through and were processed for the exact amount requested.

d

For tax year 2013, IRS provided us with totals on tax returns filed through April 24, 2014. Data on tax 

returns with an adjusted gross income of $25,000 or less are based on tax returns filed through 

October 23, 2014.

About 30 percent of Tax Time program participants also were tax filers 

who received the Earned Income Tax Credit. Enacted by Congress in 

1975, the Earned Income Tax Credit is one of the largest antipoverty 

programs.14

 

14The Earned Income Tax Credit was first enacted by the Tax Reduction Act of 1975, Pub. 

L. No. 94-12, § 204(a), 89 Stat. 26, 30 (1975) (codified as amended at 26 U.S.C. § 32). 

Generally, income and family size determine a taxpayer’s 

eligibility, and the credit is a refundable tax credit for low-to-moderate 

income working individuals and couples—particularly those with children. 

As shown in table 2, about 30 percent of tax filers participating in the 

program from 2010 through 2013 received the Earned Income Tax Credit.
Page 15 GAO-15-563 Savings Bonds 

Table 2: Number and Percentage of Tax Filers Purchasing Paper Savings Bonds 

through the Tax Time Program and Receiving the Earned Income Tax Credit, Tax 

Years 2010-2013

Tax year

a

Total number of tax 

filers purchasing 

paper savings bonds

Total number of tax 

filers purchasing 

paper savings bonds 

and receiving Earned 

Income Tax Credit b

Percentage of tax filers 

purchasing paper 

savings bonds 

receiving Earned 

Income Tax Credit (%) b

2010 32,449 10,347 32

2011 39,417 11,463 29

2012 36,263 10,405 29

2013 33,990 c 10,092 30

Total 142,119 42,307 30

Source: GAO analysis of IRS data. l GAO-15-563

a

Since Tax Time program data for tax year 2014 would not be available until after the 2015 tax filing 

season, the latest tax year for which we obtained Tax Time program data was 2013.

b

We calculated the number of tax filers for these categories by aggregating IRS data on the total 

number of tax returns filed for tax years 2010 through 2013. Since some tax filers participated in the 

program in more than one year, the number of unique tax filers is less than the total provided in this 

table.

c

For tax year 2013, IRS provided us with totals on tax returns filed through April 24, 2014. Data on 

total tax returns that were filed after April 24, 2014, and included requests to purchase paper savings 

bonds are not included in the totals in this table.

According to representatives from three nonprofit organizations and two 

academics we interviewed, tax season provides an opportunity for tax 

filers receiving a refund to set aside an amount of money specifically for 

savings. They told us that tax season was often the one time during the 

year that tax filers—particularly those with low incomes—had a relatively 

large lump sum of money available to save. However, in some instances, 

tax filers receiving a refund may already know what they plan to use their 

refunds for, and that may not include any savings.
Page 16 GAO-15-563 Savings Bonds 

Treasury has been extending the Tax Time program on an annual basis 

and plans to continue extending it in the short term. According to 

Treasury officials, the program was scheduled to expire after the 2015 tax 

season, in which case tax filers would no longer have had the option to 

use the IRS form to purchase paper savings bonds.15

Although Treasury has been extending the Tax Time program on an 

annual basis, it has not assessed the program’s costs along with its 

benefits. In deciding to extend the program in the last 2 years, Treasury 

officials told us that they considered participation levels and the amount of 

savings bonds purchased through the program. Such data indicate some 

of the program’s benefits, namely its ability to promote savings by lowerincome and other households. While the amount of bonds purchased and 

program participation levels can be quantified, other benefits of the 

program, such as providing a savings opportunity for lower-income 

households that may not be able to access TreasuryDirect to purchase 

savings bonds online, are more difficult to quantify. Although Treasury 

officials considered some of the Tax Time program’s benefits in deciding 

to extend it, they generally did not consider the program’s costs in their 

decision-making process. According to Treasury and IRS officials, 

Treasury has not conducted an analysis on the current costs of the 

program or determined how much Treasury would save if the program 

were allowed to expire after the 2016 tax season. IRS officials told us that 

However, Treasury 

officials told us that the agency decided in December 2014 to extend the 

program through the 2016 tax season. The decision was made by the 

Fiscal Assistant Secretary of the Treasury based on an internal 

recommendation from the Commissioner of the Bureau of the Fiscal 

Service, which oversees the savings bond program. Treasury officials 

said that they intended to continue recommending the continuation of 

paper tax-time bonds until a suitable electronic alternative is 

implemented. However, Treasury officials did not provide us with any 

additional information on how an electronic alternative would replace the 

option of purchasing paper savings bonds. For participants who do not 

have Internet access or want to buy bonds electronically, it is not clear 

what a suitable electronic alternative would be.

 

15According to Treasury officials, if Treasury were to discontinue the Tax Time program, 

tax filers would still have the option of having their tax refund deposited into their 

TreasuryDirect account through which they could then purchase electronic savings bonds. 

Expiration of the program would only eliminate the availability of paper savings bonds, but 

not the ability to use a tax refund to purchase electronic savings bonds.

Treasury Plans to Extend 

the Tax Time Program in 

the Short-Term, but Has 

Not Considered Program 

Costs Along with the 

Benefits
Page 17 GAO-15-563 Savings Bonds 

IRS’s current costs to administer the program were minimal, because IRS 

largely processes the forms electronically. Treasury officials told us that 

its current cost of printing and mailing a paper savings bond was 

approximately 17 cents, but this estimate did not include the share of the 

overhead, system, and other costs attributable to paper savings bonds. 

Moreover, the 17 cent estimate also did not include any cost that IRS 

incurred for its role in implementing the program.

In prior work on agency stewardship of public funds, we reported that 

properly estimating program costs is necessary for several reasons and 

that comparing these costs to the program’s benefits to evaluate 

alternatives related to program decisions is a best practice.16

In deciding to extend the Tax Time program, Treasury has considered 

some of the program’s benefits but generally not the program’s costs, 

both of which are needed to evaluate program performance and 

alternatives. As discussed, Treasury has previously considered levels of 

program participation and amounts of savings bonds purchased by 

participants in its decisions, and most recently has extended the program 

until a suitable electronic alternative is available. Consideration of not only 

the Tax Time program’s benefits but also the program’s cost would 

provide Treasury with important information in evaluating not only the 

resource requirements when deciding whether to allow the program to 

expire but also the program’s performance in relation to its benefits and 

costs. For example, if the program’s operating costs are minimal, then the 

program’s benefits may outweigh its costs, such as providing 

opportunities for lower-income households to save. Conversely, if 

program costs are significant, those costs might outweigh the program’s 

benefits in light of the number of tax filers using the program and the 

availability of an electronic alternative. However, by not having full, 

reliable, estimates of the cost of the Tax Time program to compare to the 

benefits, Treasury’s ability to make a fully informed decision is limited.

Producing 

cost estimates is important for evaluating resources and making decisions 

about programs at key decision points. Credible cost estimates also help 

support funding decisions for an agency’s programs. Comparing these 

costs to the benefits in order to consider all alternatives for a program 

ensures linkage between the alternatives.

 

16GAO, Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: March 2009). 
Page 18 GAO-15-563 Savings Bonds 

GAO found that lower-income households save relatively small amounts 

and face a number of savings challenges that result, in part, from limited 

access to financial institutions and products. According to several 

academics and nonprofits we interviewed, savings and other assetbuilding programs are fundamental building blocks for helping lower 

income-households achieve economic mobility and security. Savings 

provide a buffer against unexpected events and a means to move up the 

economic ladder through investments, such as by buying a home, paying 

for college, starting a business, or saving for retirement. In addition to the 

Tax Time program, discussed above, federal, state, and local agencies as 

well as nonprofits have developed a number of programs aimed at 

assisting lower-income households to save and build assets. These 

programs include providing financial literacy and education services, and 

range from promoting short-term financial goals, such as emergency 

savings, to long-term financial goals, such as saving for retirement.17

According to 2013 SCF data, lower-income households have limited 

savings in bank accounts and other financial assets.18 U.S. households in 

the lowest income quintile (or bottom fifth) had a median income of 

around $14,200 in 2013, and households in the next income quintile had 

a median income of around $28,400.19

 

17Our report focuses primarily on programs that promote savings or asset-building through 

financial assets, such as bank accounts, savings bonds, mutual funds, and retirement 

funds. As a result, we generally excluded programs that promote savings or asset-building 

through home purchases or other nonfinancial assets.

As shown in table 3, 82 percent 

and 93 percent of the U.S. households in the bottom two income quintiles 

had financial assets, but the median value of these financial assets were 

$550 and $3,064, respectively. In other words, half of the households in 

the lowest income quintile held $550 or less in financial assets. In 

comparison, the median value for financial assets for all surveyed 

households in 2013 was $17,580. Bank accounts are the mostly widely 

held financial asset among lower-income households, according to 2013 

SCF data. However, separate from bank accounts, a significant majority 

of lower-income households hold few or no other financial assets, such as 

stocks, bonds, or mutual funds. For example, 9 percent of U.S. 

18Financial assets in SCF include bank accounts, certificates of deposit, savings bonds, 

bonds, stocks, mutual funds, retirement accounts, and cash value life insurance.

19The 95 percent confidence interval on median income was $13,227 to $15,180 for the 

lowest quintile and $27,734 to $29,080 for the next quintile.

Savings by LowerIncome Households 

Are Limited but 

Federal Agencies and 

Other Entities Have 

Created Savings 

Programs

Lower-income Households 

Have Limited Financial 

Assets and May Have 

Difficulty Saving
Page 19 GAO-15-563 Savings Bonds 

households in the bottom income quintile have retirement accounts, 

compared with around 28 percent of households in the next lowest 

income quintile.

Table 3: 2013 Survey of Consumer Finances Holdings of Financial Assets by 

Household Income

Household 

percentile of the 

US income

distribution

Percent of 

households with 

any financial 

assets

Total 

household 

financial assets

Percent of 

households with 

any checking, 

savings, or other 

transaction 

account

Mediana Meanb

Less than 20 82% $550 $25,951 79%

20-39.9 93% $3,064 $39,751 91%

All households 95% $17,580 $253,190 93%

Source: 2013 SCF data. l GAO-15-563

Note: Based on 2013 SCF data, we defined lower-income households as the lower two distributions 

(or quintiles) of households in the United States.

a

The 95 percent confidence interval on the median holdings of financial assets were $15,744 to 

$19,416 for the population as a whole, $454 to $646 for the households with income below the 20th 

percentile, and $2,310 to $3,818 for households with income between the 20th and 39th percentiles.

b

The 95 percent confidence interval on the mean financial assets in the population as a whole is 

$240,459 to $265,920. For households with income below the 20th percentile of the U.S. income 

distribution, the 95 percent confidence interval around the mean financial assets is $14,205 to 

$37,697. For households with income in at least the 20th percentiles and below the 40th percentile, 

the 95 percent confidence interval around the mean financial assets is $32,402 to $47,100.

As shown in figure 3, median household financial assets, excluding 

retirement accounts, dropped in the wake of the 2001 and 2008 

recessions and have not recovered to pre-recession levels. Median 

holdings in 2013 were down by 40 percent or more in comparison to 

median holdings in 2001 for both the population as a whole and for lowerincome households.20

 

20The mean, inflation-adjusted non-retirement financial assets of the whole population 

were down between 2001 and 2013 because of a decline in the median and in the 

holdings of the 25th, 75th, 90th, and 95th percentiles of the population. The mean and the 

75th, 90th, 95th, and 99th percentiles values of retirement savings for the population as a 

whole increased between 2001 and 2013, and this growth in retirement assets helped 

drive slight growth in mean total financial assets for the population as a whole. 

The median value of non-retirement financial 

assets for the two lowest income quintiles was $1,000 in 2013. This total 

reflects the relatively low level of short-term savings for these households.
Page 20 GAO-15-563 Savings Bonds 

Figure 3: 2001 to 2013 Survey of Consumer Finances Median Holdings of Financial 

Assets, Excluding Retirement Accounts

Note: The 95 percent confidence interval on the median holdings of non-retirement financial assets 

for the population as a whole were: $11,288 to $14,130 in 2001, $7,736 to $10,589 in 2004, $8,651 to 

$10,432 in 2007, $5,651 to $6,742 in 2010, and $5,631 to $6,569 in 2013. The 95 percent confidence 

interval on the median holdings of non-retirement financial assets for the bottom two income quintiles 

were: $1,636 to $2,461 in 2001, $1,090 to $1,658 in 2004, $1,079 to $1,607 in 2007, $988 to $1,156 

in 2010, and $936 to $1,064 in 2013.

Some lower-income households faced challenges obtaining financial or 

banking services although SCF data indicate that most lower-income 

households have a bank account. For example, the 2013 FDIC Survey 

reported that a majority of unbanked households reported not having 

enough money to maintain an account or meet a minimum balance. Such 

households may use alternative financial services providers, such as 

nonbank check cashers, payday lenders, or pawn shops. According to the 

2013 FDIC Survey and the 2013 SCF, less than 10 percent of households 

are unbanked. In addition, one in five households (or 20 percent) were 

underbanked in 2013—underbanked households are those that have a 

bank account but have also used alternative financial services from non-
Page 21 GAO-15-563 Savings Bonds 

bank providers in the last 12 months.21

Since at least 2003, the federal government has played a broad role in 

promoting financial literacy, which encompasses financial education—the 

process by which individuals improve their knowledge and understanding 

of financial products, services, and concepts. Financial literacy plays an 

important role in helping to promote the financial health and stability of 

individuals and families. In prior work on financial literacy, we reported 

that federal agencies have made progress in recent years in coordinating 

their financial literacy activities and collaborating with nonfederal entities, 

in large part due to the efforts of the federal multiagency Financial 

Literacy and Education Commission (FLEC).

The highest unbanked rates 

continued to be found among non-Asian minorities, lower-income 

households, younger households, and unemployed households.

22

In addition to their financial literacy efforts, some federal agencies have 

developed savings programs involving financial assets. These programs 

are aimed at helping households and individuals that may not have 

access to traditional savings vehicles, such as employer-sponsored 

retirement plans.

myRA®

According to a Treasury official, Treasury launched the myRA program, 

which is in a soft-launch phase, to promote retirement savings among 

individuals without access to employer-sponsored retirement plans.23

 

21In the 2013 survey, underbanked households are those that have a bank account and 

have used at least one of the following alternative financial services from non-bank 

providers in the last 12 months: money orders, check cashing, remittances, payday loans, 

refund anticipation loans, rent-to-own services, pawn shops loans, or auto title loans. 

According to Treasury, the program offers a retirement savings account 

that is a Roth IRA, so it follows the same rules that apply generally to 

22See GAO, Financial Literacy: Overlap of Programs Suggest There May Be Opportunities 

for Consolidation, GAO-12-588 (Washington, D.C.: July 23, 2012). 

23States recognize that many of their residents currently lack access to retirement savings 

plans through their private sector employers and there are efforts in a number of states to 

study or create retirement savings plans for their residents. GAO is currently conducting a 

more detailed review of state efforts to increase private sector coverage in retirement 

savings programs and that report is forthcoming (GAO-15-556). 

Federal Agencies 

Generally Focus on 

Promoting Financial 

Literacy, but Some Are 

Involved in Savings 

Programs
Page 22 GAO-15-563 Savings Bonds 

Roth IRAs and receives the same tax treatment.24

Treasury officials stated that they worked to develop the framework for 

this program in 2014, including issuing a new Treasury security to serve 

as the investment option for these accounts, and designing easy-tounderstand materials for savers. Treasury continued to build on the 

development process by making myRA available to a small group of 

employers, including federal agencies. Presently, Treasury is working 

closely with this small group of participants to get feedback and better 

ensure that the user experience is as simple and straightforward as 

possible–both for employers and employees–before myRA becomes 

more broadly available later this year. Treasury has indicated that it is too 

early to begin evaluating the impact of the myRA program. However, 

Treasury officials told us that they will continue to monitor the progress of 

the program as it moves through its soft-launch phase.

A myRA has no fees, 

no minimum-amount requirement, a maximum balance of $15,000, and it 

can be funded through payroll direct deposit. The account houses a 

savings bond that will never go down in value (except from withdrawals) 

and the security in the account, like other Treasury securities, is backed 

by the U.S. Treasury. Participating employers make myRA information 

available to their employees. Employees are able to enroll in the program, 

and then elect to have a portion of each paycheck directly deposited into 

their myRA automatically.

Given the challenges low-and-moderate income households face in 

obtaining financial or banking services, FDIC has created a number of 

initiatives to help low and moderate-income individuals improve their 

financial skills and use financial institutions according to FDIC officials. 

For example, FDIC officials stated that, in 2001, FDIC developed the 

Money Smart program, which is a comprehensive financial education 

curriculum designed to help consumers, especially low- and- moderate 

income consumers and entrepreneurs, enhance their financial skills and 

help create positive banking relationships. Officials added that FDIC 

provides the curriculum free of charge in formats for consumers to 

 

24A myRA is subject to Roth IRA annual income eligibility limits—which means that people 

who have an annual income of less than $129,000 for individuals and $191,000 for 

couples can participate. These limits are subject to annual cost-of-living adjustments. 

Each individual saver, not the employer, will be responsible for complying with these 

income limits.

Money Smart and Model Safe 

Account Programs
Page 23 GAO-15-563 Savings Bonds 

complete on their own or through instructor-led classes.25 According to 

FDIC, the program has reached over 2.75 million consumers since 2001. 

In April 2007, FDIC used a three-part survey to determine the 

effectiveness of its Money Smart financial education curriculum and found 

that the program positively influenced how course participants managed 

their finances and their financial confidence.26

To further promote low and moderate income consumers’ access to 

financial services, FDIC developed the Model Safe Accounts Pilot in 

January 2011. The pilot was designed to evaluate the feasibility of having 

financial institutions offer safe, low-cost transaction and savings accounts 

(Safe Accounts) that are responsive to the needs of underserved 

consumers- including those with low and moderate incomes. Nine 

financial institutions participated in the pilot by offering Safe Accounts, 

which are checkless, card-based electronic accounts that limit acquisition 

and maintenance costs. These accounts allow withdrawals only through 

automated teller machines, point-of-sale terminals, automated 

clearinghouse pre-authorizations, and other automated means. Overdraft 

and nonsufficient funds fees are prohibited with the transaction accounts. 

According to FDIC, the nine banks opened more than 3,500 Safe 

Accounts during the pilot. Retention of these accounts exceeded 

expectations—more than 80 percent of transaction accounts and 95 

percent of savings accounts remained open at the end of the 1-year pilot 

period.

The study also found that 

these positive changes were sustained months after participants had 

completed Money Smart training. Specifically, the study found that 

participants were more likely to open deposit accounts, save money in a 

mainstream deposit product, use and adhere to a budget, and 

demonstrate increased confidence in their financial abilities when they 

were contacted 6 to 12 months after completing the Money Smart course 

compared to before beginning the course.

27

 

25According to FDIC, FDIC, in collaboration with CFPB, offers a stand-alone instructor-led 

module targeting the needs of older adults (age 62 and older). FDIC in collaboration with 

the Small Business Administration offers an instructor-led curriculum focusing on the 

needs of new or existing entrepreneurs. FDIC also offers Money Smart for Young People 

which offers curriculums to promote financial understanding in preschool to high school 

aged children.

According to FDIC, Safe Accounts performed on par with or 

26FDIC, A Longitudinal Evaluation of the Intermediate-term Impact of the Money Smart 

Financial Education Curriculum Upon Consumers’ Behavior and Confidence (April 2007).

27FDIC, Model Safe Accounts Pilot: Final Report (April 2012). 
Page 24 GAO-15-563 Savings Bonds 

better than other transaction and savings accounts and several of the 

banks plan to continue to offer Safe Accounts—some banks are also 

considering the possibility of graduating pilot accountholders to traditional 

deposit accounts. Although the Safe Accounts program was only a 1-year 

pilot, FDIC officials told us that the agency provides interested FDIC 

insured institutions with a Safe Accounts template that includes guidelines 

for offering cost-effective transactional and savings accounts to 

underserved consumers. This template was based, in part, on lessons 

learned during the pilot phase.

FDIC announced its Youth Savings Pilot Program on August 4, 2014. 

According to FDIC, this pilot program seeks to identify and highlight 

promising approaches to offering financial education tied to the opening 

of safe, low-cost savings accounts for school-aged children. The pilot has 

two phases. According to FDIC officials, Phase I includes FDIC insured 

institutions currently working with schools or nonprofit organizations that 

help students open savings accounts in conjunction with financial 

education programs during the 2014 to 2015 and 2015 to 2016 school 

years. Nine banks differing in size, location, and business models were 

selected for the first phase. The officials added that Phase II will include 

FDIC insured institutions beginning or expanding youth savings account 

programs during the 2015 to 2016 school year. FDIC is collecting 

summary information—including data on the number of accounts opened 

and financial education approaches used—from pilot participants. When 

the pilot is complete, FDIC intends to publish a report to provide financial 

institutions with promising approaches to working with schools and other 

organizations to combine financial education with access to a savings 

account.

The Office of Community Services at the Department of Health and 

Human Services’ Administration for Children and Families administers the 

Assets for Independence program. Started in 1998, the Assets for 

Independence program awards grants to community-based entities, 

nonprofits and state, local, and tribal government agencies that partner 

with nonprofits to implement an asset-based approach for assisting low 

income families to become economically self-sufficient according to the 

Administration for Children and Families.28

 

28The Assets for Independence Act was passed in 1998, but Administration for Children 

and Families began awarding grants in 1999. Pub. L. No. 105-285, Tit. IV, 112 Stat. 2702, 

2759 (1998) (codified as amended at 42 U.S.C. § 604 note).

 According to agency officials, 

Youth Savings Pilot Program

Assets for Independence 

Program
Page 25 GAO-15-563 Savings Bonds 

entities receiving these grants enroll participants in Assets for 

Independence projects to save earned income in special-purpose, 

matched savings accounts, also called individual development accounts. 

According to agency officials, every dollar that a participant deposits into 

an Assets for Independence individual development account is matched 

by the Assets for Independence project. Match rates can vary from $1 in 

match funds for every $1 the participant deposits in his or her individual 

development account, to as much as $8 in match funds for every $1 

saved. Participants generally must use their individual development 

accounts and matching funds for a qualified expense: the purchase of a 

home; the capitalization or expansion of a business; or post-secondary 

educational expenses.29

As illustrated in table 4, from 2010 through 2014, according to agency 

officials the Administration for Children and Families awarded 269 Assets 

for Independence grants and over $62 million to a number of 

organizations including nonprofits, state or local governments, tribal 

governments, and community development financial institutions, to name 

a few. Table 4 also shows that the program budget for the Administration 

for Children and Families since fiscal year 2010.

According to agency officials, under the program, 

grantees are required to assist participants in the demonstration project in 

obtaining the skills necessary to achieve economic self-sufficiency. 

Examples of such activities include providing financial education and 

credit counseling.

Table 4: Assets for Independence Grant Awards and Budget Authority for Fiscal 

Years 2010-2014

Year

Number of grants

awarded

Total amount awarded

(Dollars in thousands)

Budget authority

(Dollars in thousands)

2010 53 $11,240 $23,907

2011 66 $15,480 $23,977

2012 61 $13,595 $19,869

2013 45 $12,699 $18,593

2014 44 $9,974 $18,950

Total 269 $62,988 $105,296

Source: Administration for Children and Families. | GAO-15-563

 

29Participants also are permitted to transfer their IDA savings to support the asset goal of 

an account-holding spouse or dependent.
Page 26 GAO-15-563 Savings Bonds 

According to Administration for Children and Families data through fiscal 

year 2010, more than 90 percent of Assets for Independence projects 

allowed participants to pursue homeownership as an asset goal, while 

more than 80 percent allowed participants to pursue postsecondary 

education or training and business capitalization as asset goals. Nearly 

one-third of projects allowed participants to transfer account savings to 

the individual development account of a spouse or dependent.

In 2011, Administration for Children and Families began a random 

assignment evaluation of the Assets for Independence program at two 

grantee sites. This evaluation will assess the impact of Assets for 

Independence program participation on savings, savings patterns, and 

asset purchase by lower-income individuals and families. It builds on the 

previous quasi-experimental evaluation and studies of other non-Assets 

for Independence funded individual development account projects. The 

2008 evaluation used data from the early to mid-2000s and found that 

Assets for Independence program participants were 35 percent more 

likely to become homeowners, 84 percent more likely to become business 

owners, and nearly twice as likely to pursue post-secondary education or 

training compared with a corresponding national sample of 

nonparticipants eligible for the program. According to the Administration 

for Children and Families, the random assignment evaluation will further 

understanding of the program’s overall impact on early participant 

outcomes. The evaluation team completed participant enrollment and 

baseline data collection in July 2014 and expects to release its final report 

in early 2016.

The Department of Housing and Urban Development (HUD) awards 

competitive grants to public housing agencies for the administration of 

programs that encourage residents of public housing to attain selfsufficiency through programs such as the Family Self Sufficiency 

program.30

 

30In fiscal year 2015, the program was made available to families participating in the 

Section 8 Project-Based Rental Assistance program.

The program funds coordinators who help participants achieve 

employment goals and accumulate assets. Through the coordination and 

linkage to local service providers, program participants receive training 

and counseling that enables them to increase their earned income and 

decrease or reduce their need for rental assistance. Under the Family 

Self Sufficiency program, escrow accounts are used as incentives to 

Family Self Sufficiency 

Program
Page 27 GAO-15-563 Savings Bonds 

increase work effort and earnings. Specifically, when participants have to 

pay a higher rent after their earned income increases, the public housing 

agency calculates an escrow credit that is deposited each month into an 

interest-bearing account (see fig. 4). Families that successfully complete 

their contract for the Family Self Sufficiency program receive their 

accrued escrow funds.

Figure 4: HUD Family Self Sufficiency Program Escrow Account Example

According to HUD officials, over 72,000 households participated in the 

program in fiscal year 2014, and 4,382 families successfully completed 

their Family Self Sufficiency contracts. The 2013, 2014 and 2015 
Page 28 GAO-15-563 Savings Bonds 

appropriation amounts for the Family Self Sufficiency program was $75 

million.31

In September 2004, HUD commissioned a 5-year prospective study of the 

Family Self Sufficiency program, focusing on programs serving Housing 

Choice Voucher recipients.

HUD is requesting $85 million in 2016.

32

The study provided a final assessment of the experiences of a 

representative sample of Family Self Sufficiency participants that enrolled 

in 2005 and 2006. The study also examined the relationship between 

participants’ characteristics, Family Self Sufficiency programmatic 

features, and program outcomes. The study found that after 4 years in the 

Family Self Sufficiency program, 24 percent of the study participants 

completed program requirements and graduated. When the study ended, 

37 percent had left the program without graduating and 39 percent were 

still enrolled in the Family Self Sufficiency program. Program graduates 

were more likely to be employed than participants who did not graduate 

or who still were enrolled in the program. Program graduates also had 

higher incomes, both when they enrolled in the Family Self Sufficiency 

program and when they completed the program, than participants with 

other outcomes. Staying employed and increasing their earned incomes 

helped graduates to accumulate substantial savings in the Family Self 

Sufficiency escrow account. The average escrow account balance was 

$5,294 for program graduates, representing about 27 percent of their 

average household income at the time of program enrollment.

 

31The activities in this account were previously funded as a set-aside in the Tenant-Based 

Rental Assistance Administrative Fee and as part of the Resident Opportunity and SelfSufficiency set-aside in the Public Housing Capital Fund accounts; in fiscal year 2013, 

those programs were funded at $56.8 and $18 million, respectively.

32HUD, Evaluation of the Family Self-Sufficiency Program: Prospective Study (February 

2011). In 2004, HUD contracted with Planmatics, Inc., and Abt Associates Inc. to design 

and implement the study. The team selected a representative sample of 100 public 

housing authorities in the first year and collected information from FSS coordinators in 

2005.
Page 29 GAO-15-563 Savings Bonds 

Recognizing that financial literacy or education is only part of the solution 

to help lower-income households achieve financial security, state and 

local government agencies and nonprofits have developed a variety of 

programs targeting specific populations or serving a specific savings 

purpose. These include retirement savings programs, prize-linked savings 

programs, short-term emergency savings programs, and various asset 

building (or asset accumulation) programs that promote savings for 

specific goals (e.g., post-secondary education, home ownership, or 

business ownership).

Several states have created prize-linked savings programs to offer a new 

way to help lower-income and other individuals to save. As of 2015, 

Michigan, Nebraska, North Carolina, and Washington have created Save 

to Win programs, in which participating credit unions offer their members 

the opportunity to open prized-linked savings accounts. A Save to Win 

account is designed as a 12-month share certificate that allows for 

unlimited deposits throughout the year. Savers are required to deposit 

only $25 to open an account and earn raffle tickets for every additional 

$25 deposited in the account, with a cap on the number of entries per 

month. The cap helps ensure that individuals who cannot save as much 

still have opportunities to win. Raffle tickets qualify participants for the 

chance to win monthly cash prizes and grand prizes at the end of the 

year. According to Doorways to Dreams Fund, since the launch of Save 

to Win in 2009, over 50,000 accounts have been opened with over $94 

million in savings in Michigan. Moreover, the nonprofit reported that 

among surveyed Save to Win accountholders, between 62 percent 81 

percent were financially vulnerable. Michigan passed a law in 2003 to 

allow for credit unions to offer “savings promotion raffles.”33 The other four 

states also have modified their laws to allow credit unions to offer prizelinked accounts, savings promotion raffles, or other promotional contests 

of chance. On the federal level, in 2014, Congress passed the American 

Savings Promotion Act to provide for the use of savings promotion raffle 

products by financial institutions to encourage savings.34

According to some nonprofit officials and academics we interviewed, 

federal and state savings programs primarily promote and provide tax 

incentives for retirement savings, which tend to benefit higher-income 

 

332003 Mich. Pub. Acts 215, § 411 (codified at Mich. Comp. Laws § 490.411).

34American Savings Promotion Act, Pub. L. No. 113-251, 128 Stat. 2888 (2014).

State and Local 

Government Agencies and 

Nonprofits Have Also 

Developed an Array of 

Programs for LowerIncome Households to 

Promote Savings

Prize-Linked Savings

Short-Term Emergency 

Savings
Page 30 GAO-15-563 Savings Bonds 

households more than lower-income households. At the same time, they 

told us that short-term or emergency saving tends to be more important 

for lower-income households, because it helps households meet their 

immediate needs—for example, to cover unexpected car repairs, medical 

expenses, or temporary unemployment. Some government entities and 

nonprofit organizations have developed pilot and other programs to 

promote short-term emergency savings.

• According to program officials, the AutoSave Pilot was a joint initiative 

of two nonprofits—New America and MDRC. Program officials told us 

that the pilot tested the feasibility of establishing automatic savings 

programs that use direct deposit to divert a small amount of after-tax 

wages into savings accounts. Automatic savings programs would be 

especially valuable for individuals who have few liquid assets and 

limited access to low-cost credit products, because these savings can

be used as a personal safety net in the event of unanticipated 

expenses or a sudden decrease in income, according to New America 

and MDRC. AutoSave investigated two different program designs. 

The first program design, implemented in fall 2009, was the “opt -in 

program,” where employees signed up for the AutoSave savings 

program through their employer. Employees who did not have a 

savings account were able to open one through a bank or credit union 

that partnered with the workplace site. With this version of the 

program design, only the savings deposits were automatic. 

The opt-in AutoSave program design had been offered to employees 

at eight workplace sites, ranging in size between 13 and 25,000 

employees. The pilot had a special focus on generating participation 

among low- to moderate-income workers, although all employees 

were eligible to sign up. Overall participation rates ranged between 2 

percent and 62 percent of all employees at these targeted 

workplaces, with most sites ranging between 9 percent and 25 

percent. In sites where wages were tracked, the majority of 

participants had wage levels within the lower three-fifths of the wage 

distribution in their workplace. These participation results were 

consistent with expectations for the opt-in program design. The 

second investigated program design was an “opt-out program,” where 

all employees would have been automatically enrolled in the 

AutoSave savings program unless they elected not to be in the 

program. With this design, both enrollment and deposits would have 

been automatic. Opt-out enrollment was not actually piloted because 

MDRC’s assessment of the legal and operational risks concluded that 

while this approach would presumably be legal in some states, a lack 

of regulations or case law addressing the model meant that employers 
Page 31 GAO-15-563 Savings Bonds 

would be taking undue risks to implement the opt-out model. In the 

absence of such guidance or precedence, MDRC has determined that 

it is not currently feasible to implement the opt-out enrollment program 

design (even by using a payroll card with an attached savings 

product).

• According to an official at the City of San Francisco, the EARN Starter 

Account program, developed by the California non-profit EARN, seeks 

to increase the supply of starter account products that allow unbanked 

lower-income households to begin saving. Program participants must 

make at or below 50 percent of their area median income. The 

EARN Starter Account is an online program that rewards participants 

for consistently saving at least $20 each month for six months, and 

participants earn a maximum of $55 in matched funds over the six 

month period according to the nonprofit. Participants link their existing 

savings accounts to the EARN Starter Account platform to facilitate 

savings. If participants make any withdrawals over the 6 

months matched funds earned will be forfeited and the account may 

be closed. At the end of 6 months, participants can claim the funds. 

Participants can continue using the EARN website for another 6 

months. Since 2002, 6,000 EARN clients have saved $6.8 million 

dollars, and 83 percent of participants have continued to save after 

their formal program ended, according to a qualitative study by the 

nonprofit.35

 

35EARN, What Motivates Low Income Workers to Save Money (January: 2010). According 

to the report, EARN identified a group of 218 alumni who have successfully completed its 

program and used their funds. A total of 126 alumni were contacted for interviews, with 

thirty of them agreeing to be interviewed by phone or in person. EARN developed an 

interview script and protocol used for both phone and in-person interviews that explored a 

wide range of topics about the participant’s asset accumulation patterns and perceptions 

before, during, and after the individual development account program. EARN expects to 

continue these interviews over time to build a large and growing sample. 

The study found that consistent savers also demonstrated 

a shift toward future orientation. More specifically, these program 

participants were planning to acquire more assets (such as further 

education, the purchase of a home, or founding or developing a small 

business). EARN is partnering with the City and County of San 

Francisco to bring the Starter Account platform to low-income San 

Franciscans, beginning with a pilot program for public housing 

residents.
Page 32 GAO-15-563 Savings Bonds 

Some government entities and nonprofit organizations have developed 

programs to encourage lower-income households to save part of their 

income tax refund.

• According to officials at the Center for Social Development at 

Washington University in St. Louis, Refund to Savings is a pilot 

program intended to help lower-income households build savings and 

increase financial security.36 Launched in 2012, the pilot is a 

collaboration among Washington University in St. Louis, Duke 

University, and Intuit Inc. According to program officials, the program 

is implemented through a version of Intuit’s tax preparation software 

that is available for free to lower-income taxpayers and reaches 

approximately 1.2 million households. The goal of the initiative is to 

design and test a low-cost scalable intervention that can lead tax filers 

to save part of their tax refund. Under the pilot, Intuit users are 

assigned randomly to a treatment or control group. The treatment 

group uses a version of the software in which they receive prompts to 

motivate them to save part of their tax refund as emergency savings. 

In 2013, the pilot tested automatic refund splitting in which the 

software automatically put part of the tax filer’s refund in a savings 

account or savings bond. According to officials at the Center for Social 

Development, tax filers who did not want to split their refund had to 

select an “I don’t need to save” button to opt out. In 2013, almost 

900,000 low- and moderate-income tax filers participated in the pilot, 

depositing approximately $5.9 million more in savings accounts than 

they would have without the intervention, according to the Center for 

Social Development officials. Data generated by program use and 

refund allocation behavior will be evaluated to determine whether the 

prompts, saving opportunity, or both increased saving levels 

compared with the control group, according to the Center for Social 

Development at Washington University.

• According to officials at MDRC and New York City’s Office of 

Financial Empowerment, the SaveUSA program (formerly $aveNYC) 

is administered by the Mayor’s Fund to Advance New York City and 

the New York City Center for Economic Opportunity and offers lower-

 

36Center for Social Development, Washington University in St, Louis, Refund to Savings 

(R2S): Insight from the Field, 2012 (St. Louis, MO: 2013). 
Page 33 GAO-15-563 Savings Bonds 

income households an incentive to save a portion of their tax refund.37

According to program officials, SaveUSA was launched in 2011 in four 

cities (New York City, Tulsa, San Antonio, and Newark). Participants 

open a SaveUSA account when they file their taxes. They are 

required to save at least $200 of their refund for a year, and earn 50 

cents for every dollar saved, with a maximum match of $500. 

According to an April 2014 study of the program by MDRC, nearly 

two-thirds of SaveUSA participants in 2011 (the program’s first year) 

qualified for the savings match and received, on average, $191 in 

savings match dollars.38

Asset building is based on strategies that help households build financial 

or tangible assets, such as savings, a home, or a business. A number of 

nonprofits, states, and municipalities have developed programs to help 

lower-income households build assets through the use of individual 

development accounts or child development accounts.

In the second program year, 39 percent of 

the 2011 SaveUSA sample participated again, and about 27 percent

received a savings match according to the MDRC study. The MDRC 

study found that on average, SaveUSA group members received $96 

in savings match dollars in the program’s second year. According to 

the MDRC study, those who received a savings match in both years 

appear to have been in a better position to save—they tended to be 

older, were more likely to have more income, and were more likely to 

have pledged the maximum amount allowed of $1,000, compared with 

other SaveUSA group members. In contrast, SaveUSA group 

members who had especially low incomes or who pledged the 

minimum amount of $200 were the least likely to ever receive a 

savings match.

 

37According to a 2014 MDRC study, in January 2011, enrollment in the SaveUSA study 

began in select Volunteer Income Tax Assistance sites in New York City, Tulsa, Newark, 

and San Antonio. In addition to providing tax return preparation services to hundreds of 

clients per week, Volunteer Income Tax Assistance staff marketed the SaveUSA account, 

enrolled individuals in the study, and helped SaveUSA group members open their 

SaveUSA account. The program was voluntary, but anyone meeting the program’s 

eligibility requirements and interested in opening a SaveUSA account had to agree to 

participate in the study to be eligible to open an account. The Volunteer Income Tax 

Assistance sites recruited about 2,500 individuals into the study between January and 

April 2011, the 2010 tax return preparation season.

38Gilda Azurdia, Stephen Freedman, Gaye Hamilton, and Caroline Schultz, Encouraging 

Low- and Moderate-Income Tax Filers to Save: Implementation and Interim Impact 

Findings from the SaveUSA Evaluation (New York, NY: April 2014). 

Asset-building
Page 34 GAO-15-563 Savings Bonds 

As discussed, the Office of Community Services at the Administration for 

Children and Families administers the Assets for Independence program, 

which awards grants to community-based entities, nonprofits, and 

government agencies to implement special-purpose, matched savings

accounts or individual development accounts. The length of the program, 

amount of matching dollars provided, allowable uses for savings, and 

other rules may be different from one program to the next.

An example of an individual development account is the Assets for All 

Alliance program. According to officials at the Opportunity Fund, this 

individual development account was launched in 1999 by the Opportunity 

Fund (formerly Lenders for Community Development) in collaboration 

with the Silicon Valley Community Foundation Center for Venture 

Philanthropy and several community partners, including a number of 

nonprofit social service agencies.39 According to a study published by the 

Silicon Valley Community Foundation and Lenders for Community 

Development, the Assets for All Alliance individual development account 

program is intended to help lower-income families “learn financial 

management skills and build assets that would help them permanently 

improve their economic situation.“40

According to officials at the Center for Social Development at Washington 

University in St. Louis, child development accounts are savings or 

investment accounts opened as early as birth. The goal of child 

development accounts is to promote saving and asset building for lifelong 

development. Child development accounts assets may be used for 

postsecondary education, homeownership, or enterprise development. In 

many cases, public and private entities deposit funds into these accounts 

to supplement savings for the child. Although the goal of child 

development accounts is long-term savings accumulation, programs differ 

in design and features. According to the Center for Social Development, 

Savings by program participants are 

“matched by philanthropic and government dollars on a two-to-one basis” 

according to the study. According to the Opportunity Fund, this program 

has resulted in 1,028 individual development accounts and $2.77 million 

in total savings towards asset goals.

 

39Silicon Valley Community Foundation and Lenders for Community Development, 

Families Saving and Building Hope: 2007 Report on Graduates of the Assets for All 

Alliances (Mountain View, CA). 

40Silicon Valley Community Foundation and Lenders for Community Development, 2007 

Report, 3.
Page 35 GAO-15-563 Savings Bonds 

enrollment in some states, including Maine and Nevada, is automatic 

unless parents opt out (opt-out programs). Some other child development 

accounts are voluntary or opt-in, meaning that parents must enroll their 

children, often by opening a 529 or bank savings account. For example, 

the Nevada College Kick Start program automatically deposits $50 into a 

529 account for every public school kindergartner in the state according 

to officials at the Center for Social Development. In 2014, 70,000 students 

had been enrolled in Kick Start. Officials told us that Maine’s College 

Challenge is the only statewide universal child development account 

program in the nation, benefiting all children born in Maine (more than 

40,000 children in 2014). The program automatically deposits $500 into a 

529 account on the child’s behalf. Both Nevada and Maine’s 529 plans 

offer savings matches to state residents according to officials at the 

Center for Social Development. Other examples of child development 

accounts include those developed by national nonprofits including the 

Corporation for Enterprise Development and New America. According to 

New America, some municipalities also have launched their own child 

development account programs. For example, as New America reports, in 

San Francisco the Kindergarten to College program was launched in 

2011 and opens accounts for every kindergartner in the city’s public 

schools.

Lower income households face a variety of challenges to saving. U.S. 

savings bonds continue to provide Americans, including those with lowerincomes, with an affordable, safe, and convenient way to save and invest. 

However, when Treasury ended the over-the-counter sale of paper 

savings bonds through financial institutions in January 2012, it created 

challenges for some bond buyers who had to rely on accessing 

TreasuryDirect to purchase savings bonds online. Treasury has taken 

steps to develop a more flexible and responsive Internet-based system 

than TreasuryDirect, but the TRIM system is in the early stages of 

development. Treasury intends for these changes to address some of the 

existing access and other challenges associated with TreasuryDirect. 

Currently, the Tax Time Savings Bond program provides the only means 

by which individuals can purchase paper savings bonds, but the 

program’s future is uncertain, because Treasury may discontinue the 

program when TRIM is implemented. However, the TRIM system still will 

require Internet access by computer or mobile device, and Tax Time 

program users who lack Internet access may not be able to save by 

buying savings bonds at tax time if the program is discontinued. How the 

benefits and costs of the Tax Time program would compare when 

Treasury implements TRIM is not known—in part because Treasury 

generally has considered the program’s benefits but not the program’s 

Conclusion
Page 36 GAO-15-563 Savings Bonds 

costs. Without considering both, Treasury cannot make a fully informed 

decision on whether to discontinue the Tax Time program when an 

electronic alternative is available.

To help ensure that Treasury can make a fully informed decision on 

whether to discontinue the Tax Time Savings Bond program as it 

implements the TRIM system, GAO recommends that the Secretary of 

the Treasury consider the benefits and costs of the Tax Time program in 

future decisions on whether to extend the program.

We provided a draft of this report to Treasury and IRS for review and 

comment. In their comment letter, which is reprinted in appendix II, 

Treasury agreed with GAO’s recommendation and stated that it would 

conduct a cost-benefit analysis of the Tax Time Savings Bonds program. 

Treasury also provided technical comments, which we incorporated, as 

appropriate. We also provided draft excerpts for technical comment to 

federal and other agencies—including the Departments of Health and 

Human Services and Housing and Urban Development, FDIC, New York 

City’s Office of Financial Empowerment, and San Francisco Office of 

Financial Empowerment—and nonprofit organizations, including the 

Center for Social Development at Washington University, Doorways to 

Dreams Fund, MDRC, and Opportunity Fund. These third parties 

provided technical comments, which we have incorporated, as 

appropriate.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to Treasury, IRS, FDIC, 

HUD, and the Department of Health and Human Services, interested 

congressional committees, members, and others. In addition, the report 

will be available at no charge on the GAO website at http://www.gao.gov. 

Recommendation for 

Executive Action

Agency Comments
Page 37 GAO-15-563 Savings Bonds 

If you or your staffs have any questions about this report, please contact 

Cindy Brown Barnes at (202) 512-8678 or brownbarnesc@gao.gov. 

Contact points for our Offices of Congressional Relations and Public 

Affairs may be found on the last page of this report. GAO staff who made 

major contributions to this report are listed in appendix III.

Cindy Brown Barnes

Director

Education, Workforce, and Income Security
Page 38 GAO-15-563 Savings Bonds 

List of Congressional Requesters

The Honorable Matt Cartwright

House of Representatives

The Honorable Dan Benishek

House of Representatives

The Honorable Sean Duffy

House of Representatives

The Honorable Keith Ellison

House of Representatives

The Honorable Ruben Hinojosa

House of Representatives

The Honorable Richard Neal

House of Representatives

The Honorable Charles B. Rangel

House of Representatives

The Honorable Niki Tsongas

House of Representatives
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-15-563 Savings Bonds 

Our review examines (1) the effect of Treasury’s elimination of paper U.S. 

savings bonds, including on the savings bond program and bond

purchases; (2) the extent to which Treasury’s Tax Time Savings Bond 

program has promoted savings, particularly by lower-income households, 

and Treasury’s plans for the program’s future; and (3) the extent to which 

lower-income households are saving using financial products, and some 

of the government and nonprofit programs developed to promote savings 

by lower-income households.

For all three objectives, we analyzed various data. First, we used data 

issued by the Department of the Treasury (Treasury) on the amount of 

U.S. savings bonds purchased from 2001 through 2013 to analyze trends 

in savings bond purchases over this period, including the effect of the 

Treasury’s elimination of paper savings bonds on savings bond 

purchases. Second, we used data from the triennial Survey of Consumer 

Finances (SCF) issued by the Board of Governors of the Federal Reserve 

System for survey years 2001, 2004, 2007, 2010, and 2013 to estimate 

the percentage of U.S. households holding financial assets, including 

U.S. savings bonds; the median value of such financial assets held by 

U.S. households, and the median income of households. The survey data 

include information on families’ balance sheets, pensions, income, 

investments, and demographic characteristics. We analyzed the U.S. 

population data as a whole and also considered the bottom two income 

quintiles separately. We chose these survey years because they provide 

a period of about 10 years prior to and 1 year after the discontinuation of 

the sale of paper savings bonds at financial institutions. We analyzed the 

U.S. population data as a whole and also considered the bottom two 

income quintiles separately. SCF data are based on probability samples 

and estimates are formed using the appropriate estimation weights 

provided with the survey’s data. Because each of these samples follows a 

probability procedure based on random selections, they represent only 

one of a large number of samples that could have been drawn. Since 

each sample could have provided different estimates, we express our 

confidence in the precision of our particular sample’s results as a 95 

percent confidence interval (i.e., plus or minus 2.5 percentage points). 

This is the interval that would contain the actual population value for 95 

percent of the samples we could have drawn. Unless otherwise noted, all 

percentage estimates have 95 percent confidence intervals that are within 

5 percentage points of the estimate itself, and all numerical estimates 

other than percentages have 95 percent confidence intervals that are

within 5 percent of the estimate itself. We also reviewed documentation 

on the SCF, such as codebooks and Federal Reserve bulletins. Third, we 

used aggregated data provided by the Internal Revenue Service (IRS) on 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 40 GAO-15-563 Savings Bonds 

income tax filers who used at least part of their tax refunds to buy paper 

savings bonds from 2010 through 2013 to analyze the number of tax filers 

who bought paper savings bonds, including those with adjusted gross 

incomes of $25,000 or below—the lowest income category reported in the 

data—and the amount of savings bonds they purchased.1

To examine the effect of Treasury’s elimination of paper U.S. savings 

bond, including on the savings bond program and bond purchases, we 

reviewed data on savings bonds purchases from 2001 through 2013, and 

analyzed trends in purchases for this time period, including before and 

after paper savings bonds were discontinued in January 2012. 

Specifically, to analyze long- term trends in savings bond purchases and 

more recent trends since the end of paper sales, we estimated two 

econometric models. The first model was based on a portfolio choice 

model, and modeled purchases as a function of interest rates, inflation, 

and economy-wide risk (using the Chicago Board Options Exchange’s 

Volatility Index). In other words, consumers may make savings bond 

purchase decisions the same way they make other decisions about 

financial portfolio allocation, based on risk and return considerations. The

second model was based on linear and quadratic time trends to capture 

the long-term reduction in purchases. We included monthly seasonal 

effects in both models. The drop in savings bond purchases after the end 

of paper sales was consistent with long-term trends and generally not 

statistically significant. The drop in purchases after the end of paper sales 

also was consistent with the reduction in interest rates at the time (the 

coefficient on interest rates was highly statistically significant). As with 

any econometric model, our approach is imperfect and is unlikely to 

We also used 

the aggregated data to analyze refund options used by the tax filers (such 

as paper check and paper savings bond, direct deposit and paper savings 

bond, or paper savings bond only) and demographic information about 

the filers, such as their age. We assessed the reliability of the data we 

used by interviewing knowledgeable officials, and conducting manual 

testing on relevant data fields, such as the number of tax filers who 

participated in the program and amounts of savings bonds purchased. 

We found the data we reviewed to be sufficiently reliable for the purposes 

of our analyses.

 

1

For tax year 2010, IRS only had data on the amount of paper savings bonds tax filers 

asked to be purchase and not the actual purchase figures. IRS officials explained that in 

almost all cases, the requests go through and are processed for the exact amount 

requested.
Appendix I: Objectives, Scope, and 

Methodology

Page 41 GAO-15-563 Savings Bonds 

include all factors that influence savings bond purchases. Additional data 

over time might provide different or more definitive estimates of the 

change in purchases associated with the end of paper sales. We 

reviewed Federal Register releases on TreasuryDirect and its 

replacement system, the Treasury Retail Investment Manager; Treasury 

documentation, including a description of data in the monthly statement of 

public debt, estimates of cost savings from eliminating paper savings 

bonds, press releases, Bureau of the Fiscal Service’s President’s budgets 

and capital investment plans; and TreasuryDirect materials. To assess 

the reliability of Treasury’s cost estimates, we interviewed Treasury 

officials on how the estimates were determined and reported. We also 

interviewed Treasury officials to discuss a range of issues related to its 

savings bond program, including the benefits and costs of eliminating 

paper savings bonds, concerns raised about TreasuryDirect, and plans 

for replacing TreasuryDirect.

To determine the extent to which Treasury’s Tax Time Savings Bond 

program has promoted savings, we analyzed IRS data on the use of the 

program by tax filers for tax years 2010 through 2013 (as discussed in 

detail above). We also reviewed IRS documentation on the program, such 

as descriptions on how the program operates and answers to common 

questions about the program, and studies on the Tax Time program 

published by academics and nonprofit organizations focusing on social or 

economic policy. We interviewed Treasury and IRS officials about the Tax 

Time program’s operations, benefits, costs, and future in terms of its 

expiration. To better understand the extent to which this program can help 

lower-income households to save, we interviewed nonprofit organizations 

focusing on social or economic policy, including Doorways to Dreams 

Fund, New America, Corporation for Enterprise Development, and 

MDRC.

To examine the extent to which lower-income households are saving 

using financial products, we examined SCF data for survey years 2001, 

2004, 2007, 2010, and 2013 (as described in greater detail above). Based 

on these data, we defined lower-income households as the lower two 

distributions (or quintiles) of households in the United States.2

 

2

For a given characteristic, a percentile can be used to define a family’s rank relative to 

other families—when a distribution is divided at every 20th percentile, as in the SCF data, 

the groups are known as quintiles.

To 

describe some of the government and nonprofit programs developed to 
Appendix I: Objectives, Scope, and 

Methodology

Page 42 GAO-15-563 Savings Bonds 

promote savings by lower-income households, we conducted Internet and 

literature searches for research, initiatives, testimonies, and studies on 

savings programs targeting lower-income households and reviewed 

materials on such programs. We specifically reviewed select federal, 

state, local, and nonprofit programs targeting either long-term (such as 

retirement or asset accumulation) or short-term savings goals for lowerincome households. For the purposes of this report, we focused on 

programs designed to promote savings using financial assets, such as 

bank accounts, bonds, mutual funds, and retirement accounts. We 

generally excluded programs designed to promote savings through home 

ownership or other nonfinancial assets. For federal programs, we focused 

our review on federal agencies involved in promoting financial literacy that 

are members of the multiagency Financial Literacy and Education 

Commission (FLEC). We interviewed six FLEC member agencies—the 

Departments of the Treasury, Housing and Urban Development, Health 

and Human Services, and Education; the Federal Deposit Insurance 

Corporation; and the Bureau of Consumer Financial Protection, also 

known as the Consumer Financial Protection Bureau—about their 

savings programs and reviewed related documentation.

We also reviewed select state, local, and nonprofit programs targeting 

lower-income households. We selected these programs based on our 

research of savings programs for lower-income households and 

interviews with FLEC members and other stakeholders. For the programs 

we selected, we interviewed relevant program officials and reviewed 

documentation on the programs, including information on participation in 

the programs where available. Finally, we interviewed other relevant 

stakeholders, including Doorways to Dreams Fund, New America, 

Corporation for Enterprise Development, MDRC, Consumers for Paper 

Options, and academics.

We conducted this performance audit from August 2014 to July 2015 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Comments from the Department 

of the Treasury

Page 43 GAO-15-563 Savings Bonds 

Appendix II: Comments from the Department 

of the Treasury
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 44 GAO-15-563 Savings Bonds 

Cindy Brown Barnes, 202-512-8678 or brownbarnesc@gao.gov

In addition to the contact named above, Richard Tsuhara (Assistant 

Director), Tarek Mahmassani (Analyst-in-Charge), Emily R. Chalmers, 

Michael Gitner, Michael Hoffman, Wati Kadzai, Robert Letzler, Marc 

Molino, Patricia Moye, and Andrew Stavisky made significant 

contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(250796)
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