Small-dollar children's savings accounts and children's college outcomes by income level

This is paper two of four in the small-dollar children's savings account series in this issue that examines the relationship between children's small-dollar savings accounts and college enrollment and graduation. This series of papers uses different subsamples to examine three important research questions: (a) Are children with savings of their own more likely to attend or graduate from college; (b) Does dose (no account, only basic savings, savings designated for school of less than $1, $1 to $499, or $500 or more) matter; and (c) Is designating savings for school more predictive than having basic savings alone. Using propensity score weighted data from the Panel Study of Income Dynamics and its supplements we created multi-treatment doses of savings accounts and amounts to answer these questions separately for children from low- and moderate-income (below $50,000; n = 512) and high income ($50,000 or above; n = 345) households. We find that low- and moderate-income children may be more likely to enroll in and graduate from college when they have small-dollar savings accounts with money designated for school. A low- and moderate-income child who has school savings of $1 to $499 prior to reaching college age is over three times more likely to enroll in college and four times more likely to graduate from college than a child with no savings account. These findings lead to policy implications that are also discussed.     

Small-dollar accounts,children's college outcomes,and wilt

This is paper four of four in the Small-Dollar Children's Savings Account series, which studies the relationship between children's small-dollar savings accounts and college enrollment and graduation. This series of papers examines three important research questions using different subsamples: (a) Are children with savings of their own more likely to attend or graduate from college? (b) Does dosage (i.e., having no account, only basic savings, savings designated for school [of less than $1, $1 to $499, or $500 or more]) matte? And (c) is having savings designated for school more predictive than having basic savings alone? In this study we use a sample of children who expect to graduate college prior to leaving high school as a way of looking at wilt. In this study “wilt” occurs when a child who expects to graduate from college while in high school does not graduate college by 2009. Using propensity score weighted data from the Panel Study of Income Dynamics (PSID) and its supplements we created multi-treatment dosages of savings accounts and amounts to answer the previous questions. We find that in the aggregate children who expect to graduate college prior to leaving high school (high-expectation children) and who designate savings for school of $500 or more are about two times more likely to graduate college than high-expectation children with no account. High-expectation low- and moderate-income (LMI) children who designate school savings of $1 to $499 and $500 or more are about three times more likely to graduate college than LMI children with no account. Further, high-expectation black children who have school savings of $500 or more are about two and half times more likely to graduate from college than their counterparts with no savings account.     

Small-dollar children's savings accounts and children's college outcomes

This is paper one of four in the small-dollar children's savings account series, which, studies the relationship between children's small-dollar savings accounts and college enrollment and graduation. This series of papers uses different subsamples to examine three important research questions: (a) are children with savings of their own more likely to attend or graduate from college? (b) does dose (i.e., having no account, only basic savings, savings designated for school [of less than $1, $1 to $499, or $500 or more]) matter? and (c) is having savings designated for school more predictive than having basic savings alone? Paper one of this series uses aggregate data from the newest wave of the Panel Study of Income Dynamics (PSID) and its supplements. Propensity score weighted findings suggest that children who have a small amount of money (e.g., less than $1 or $1 to $499) designated for school are 3 times and 2.5 times more likely, respectively, to enroll in and graduate from college, respectively, than children with no account. Findings also show that having savings designated for school might have a stronger effect on relationship with children's college outcomes than having basic savings that can be used for any purpose. The paper concludes by explaining how policies that create national children's savings programs might help cue a psychological process in which children form an identities as college-savers.     

Heterogeneous Effects of Child Development Accounts on Savings for Children’s Education

We examine effects of Child Development Accounts on savings for postsecondary education in a statewide experiment (N = 2,677), which automatically opened state-owned college savings accounts for treatment-group children, and encouraged their caregivers to open and save in participant-owned college savings accounts. The experiment achieves universal participation for children in the treatment group; almost all treatment-group children hold an account with more than $1,000 in college assets. Treatment participants we expect would hold their own participant-owned accounts without the intervention have $395 more in savings than their counterparts in the control group; those who are motivated by the intervention to hold a participant-owned account have mean deposits of $888. Those who are motivated by the intervention to save have mean deposits of $1,826. The intervention reduces the socioeconomic disparity in asset accumulation for children. The program has the potential to promote asset building for children’s education.     

Connections with banking institutions and diverse asset portfolios in young adulthood: Children as potential future investors

A central hypothesis of Child Development Accounts (CDA) suggests that savings accounts in childhood lay a foundation for connecting to mainstream banking institutions and diversifying asset portfolios in young adulthood and beyond. While children may have limited savings to invest initially, they are financial actors who may increasingly invest money into different types of savings products over time. This paper uses propensity score weighted, longitudinal data from the Panel Study of Income Dynamics and its supplements to examine the types of financial and nonfinancial assets owned by young adults and whether or not they are more likely to own these assets when they have savings accounts as children. The most commonly owned assets in young adulthood included savings accounts (89%), vehicles (54%) and credit cards (51%). Smaller percentages owned stocks (9%), bonds (6%), and homes (8%). On average, young adults owned two to three different assets. Having savings accounts in childhood was associated with being two times more likely to own savings accounts, two times more likely to own credit cards, and four times more likely to own stocks in young adulthood, compared to not having savings accounts in childhood. Young adults' ownership of more total financial assets was also associated with having savings accounts in childhood. Findings provide some supporting evidence of demand for children's savings accounts. Policy endeavors that remove barriers to account ownership may be advantageous for children and mainstream banks.     

Accumulating assets,debts in young adulthood: Children as potential future investors

Child Development Accounts (CDA) aim to open savings accounts in childhood as a way to lay a foundation for building assets in young adulthood and beyond. Mainstream banks may be key partners in opening the accounts in which children can build assets. While children may have limited savings to invest initially, they may increasingly invest over time by accumulating assets and debts through mainstream banks. Mainstream banks may benefit from children's increasing investments. This paper uses propensity score weighted, longitudinal data from the Panel Study of Income Dynamics and its supplements to examine savings, assets, debt, and net worth accumulation of young adults and whether or not they accumulate more when they have savings accounts as children. Young adults accumulate a median of $1000 in savings accounts, $4600 in total assets, $965 in debt (excluding student loans), and $4000 in net worth (excluding student loans). Young adults accumulate more savings and total assets when they have savings accounts as children. They accumulate less debt and more net worth when their households accumulate high net worth.     

The effects of economic instability on children's educational outcomes

Welfare Based on Assets, a Way to Smooth Out Economic Instability and Develop Children's Human Capital is a four-part series of papers that focuses on the relationship between economic instability (i.e., income shocks, asset shocks, home loss, and asset poverty) and children's human capital development. Collectively, these reports build on the compelling observation that the pattern low-income families walk into is a present time oriented or consumption based pattern of behavior; in contrast, the pattern higher income families walk into is future oriented or asset based. In the third paper we find in most cases income shocks and asset shocks do not appear to be harmful to children's educational outcomes. However, children living in liquid and net worth asset poor families have lower academic achievement scores, high school graduation rates, college enrollment rates, and college graduation rates than children living in families that are asset sufficient. Overall, findings can be interpreted as suggesting that a bifurcated welfare system, with income-based programs for poor families and asset-based programs for higher income families, may provide higher income families with an educational advantage over low-income families and might ultimately help exacerbate educational inequalities in America.     

The role of savings and wealth in reducing ‘wilt’ between expectations and college attendance

‘Wilt’ occurs when a young person in high school expects to attend college but does not do so shortly after graduating. In this study we find that youth with no savings account in their own name are more likely to experience wilt than any other group examined. In multivariate analysis, young people who expect to graduate from a four-year college and have an account are approximately six times more likely to attend college than those with no account. Teens who expect to graduate from a four-year college and have designated a portion of their savings for college are approximately three times more likely to attend college than those with no account. Additionally, when savings are taken into account, academic achievement is no longer a significant predictor of college attendance. Policy implications are discussed.     

Improving College Progress among Low- to Moderate-Income (LMI) Young Adults: The Role of Assets

Little is known about the impact of assets on low- to -moderate-income (LMI) young adults’ college progress. In this study college progress refers to young adults who were currently enrolled in, or who have a degree from, a 2-year college or a 4-year college. Findings from this study suggest LMI young adults with school savings were more than three times as likely to be on course than LMI young adults without any savings or who had savings but had not designated any of it for school. In regard to net worth, we found no evidence to suggest that higher amounts of negative net worth were statistically significant; however, high positive net worth was associated with LMI young adults college progress. Findings suggest policy instruments designed to assist adolescents to save such as universal Child Development Accounts may be a simple and effective strategy for helping to keep LMI young adults on course.     

FAMILY STRUCTURE AND COLLEGE GRADUATION: IS THE STEPPARENT EFFECT MORE NEGATIVE THAN THE SINGLE PARENT EFFECT?

We use data from the National Longitudinal Education Study (NELS) to build upon previous research that considered the negative effects of living in mother-only families and stepparent families on the subsequent educational attainment of children. Our results break new ground in finding that although those who lived in a mother-only family are not less likely overall to graduate college than those who lived with two biological parents, they are significantly less likely to graduate college given four-year college attendance even when other important factors are controlled. In addition, we find that those who lived in a stepparent family are less likely overall to graduate college than those who lived with two biological parents when other important factors are controlled. This difference for those who lived in a stepparent family is due to lower chances of four-year college attendance given high school graduation and of college graduation given four-year college attendance.     

Parental unemployment and children's educational attainment: How big is the role of aspirations?

Children exposed to parental unemployment have been found to lag behind in school, but research has struggled to pin down the underlying explanation. One hypothesis is that parental unemployment may dampen children's aspirations to do well and go far in school. Yet, few studies on parental unemployment have relied on actual measures of children's aspirations or devised a formal analysis of this mechanism. Using the UK Household Longitudinal Study (Waves 1–12, N = 1067), I investigate the role of educational aspirations in children's General Certificate of Secondary Education (GCSE) attainment. I compare adolescents exposed to parental unemployment before or only after the typical age at which GCSE exams are taken. In adjusted models, children exposed to parental unemployment before their GCSEs are around 6 percentage points less likely to attain any GCSE qualification by age 17. On average, children have high educational aspirations, although intentions to enrol in college or university are relatively lower among children exposed to an early spell of parental unemployment. Nevertheless, a hypothetical intervention setting these aspirations to the same level for all children only accounts for a modest portion of the educational penalty tied to an early spell of parental unemployment. Several sensitivity and robustness tests support this conclusion. This note seeks to stimulate more research on the mechanisms underpinning the intergenerational effects of unemployment. Findings cast doubts on the idea that children's aspirations, the target of broader policy discourse and interventions, are a crucial part of the equation.     

Predicting children's savings: The role of parents' savings for transferring financial advantage and opportunities for financial inclusion

Parents transfer many forms of advantage to children based on their financial resources. Of interest is whether parents transfer educational and financial advantages and whether this occurs early in life. This paper examines financial advantage by asking whether children's own savings—apart from that of their parents—can be predicted by a separate measure of parents' savings for their child. This study predicts children's basic and college savings at ages 12 to 15 with separate samples from low-to-moderate- (LMI; N = 333) and high-income (HI; N = 411) households using Panel Study of Income Dynamics and Child Development Supplement data. Propensity score weighting and logistic regression results find that parents' savings for their child is significant in both household types. Given this, policies that aim to include children in savings may help reduce transfers of financial advantage and, ultimately, educational advantage.     

Differential predictors of academic achievement: individual and familial factor interactions with community poverty

We present an analysis of the contexts within which adolescents graduate from high school and enroll in college. Data from the National Longitudinal Study of Adolescent Health show that adolescents’ school engagement, maternal academic monitoring, and community poverty significantly interact to explain differences in high school graduation and college enrollment rates (n?=?7100). To examine this association, we performed weighted logistic regression analyses, controlling for gender, race, block level unemployment, and block level median income. Findings suggest that protective factors can help youth overcome the challenges associated with community poverty and achieve academically in low and medium levels of poverty, but that youth in high-poverty contexts may need more resources to reach higher levels of academic attainment.     

The impact of maternal education on children's enrollment in early childhood education and care

This study examined the influence of maternal education and other child and family characteristics on the enrollment of children in early childhood education and care. Data come from the National Household Education Survey for a 14-year period and include children ages 0-5 years old. Multinomial logit analysis was employed to show the effect of maternal education on the likelihood of being enrolled in a specific type of care arrangement including both formal and informal settings. Findings suggest that more advantaged children, even those under 3 years of age, enroll in higher quality settings, thereby granting them an advantage when they begin school.     

A multi-group structural equation model (SEM) examining asset holding effects on educational attainment by race and gender

Little is known about the processes through which parents' and children's wealth may influence children's math and reading scores. Even less is known about how these processes may vary across race and gender. In this study we analyze Panel Study of Income Dynamics (PSID) data using multi-group structural equation modeling (SEM) to examine wealth effects by gender (male/female) and race (white/black). Results suggest that there are important statistical differences across race and gender. For example, we find that children's school savings predict math scores among white children but not black children. Net worth is a positive predictor of black males' math scores but a negative predictor of black females'. In the case of income, we find that it is directly related to black females' math scores but not black males'. In general, findings suggest that liquid forms of wealth (i.e., forms of wealth that are easily converted into cash) may be better predictors of children's academic achievement than net worth.     

“We Don't Know How to Do This”: Rural Parents' Perspectives on and Roles in Enrollment at a Private,Selective Liberal Arts College

Rural youth trail their non-rural counterparts in college enrollment and attainment, especially for degrees from selective schools; these gaps further spatial inequality in the United States. Much research has focused on rural parents as impediments to rural college-going: many rural parents did not attend college, and their educational aspirations for their children are lower than those of urban parents. However, every year, thousands of rural students do head to college, even to selective schools, and little is known about their parents' influence on their enrollment. This qualitative study focuses on rural parents without a bachelors degree, investigating the roles they play in their children's aspirations and enrollment at a private, selective liberal arts college and examining their perspectives on this type of school. The results suggest that parents are an important source of social capital, supporting aspirations and enrollment. They also show that these parents see a liberal arts education as a path to a remunerative and rewarding career, and, in supporting their children's college choice, they value factors—financial aid, proximity, and a welcoming school culture—that mitigate the social, cultural, and moral boundaries separating home from college.     

Prevalence and economic well-being of families raising multiple children with disabilities

This study estimates the prevalence of households raising more than one child with disabilities, and examines these families' economic well-being. Using pooled data from the 2004 and 2008 Survey of Income and Program Participation we compare households with multiple children with disabilities (n = 932) to households with one disable child (n = 3457) and to households with at least one child but none with disabilities (n = 21,378) on measures of material hardship. Three percent of U.S. households with children had more than one disabled child. Compared to other households with children, those with multiple children with disabilities were significantly more likely to have income below the federal poverty level and to report material hardships. The number of children with disabilities is an important contextual variable for studying the economic circumstances under which, care is provided to children with disabilities. Its implications for practice and policy are discussed.     

Freshman year alcohol and marijuana use prospectively predict time to college graduation and subsequent adult roles and independence

Objective: This study examined how freshman year substance use prospectively predicted time to college graduation, and whether delayed graduation predicted postponed adoption of adult roles and future substance use. Participants: Participants were part of a longitudinal study that began in 2004. The first analyses focused on freshman year (N = 2,050). The second analyses corresponded to a subset of participants at age 27 (N = 575). Methods: Measures included self-reported substance use, adult role adoption, and university reported graduation dates. Results: Results indicated that frequent binge drinking and marijuana use during freshman year predicted delayed college graduation. Those who took longer to graduate were more likely to have lower incomes and were less likely to obtain a graduate degree. Taking 5–6 years to graduate was associated with greater likelihood of alcohol-related problems. Conclusions: Findings support the importance of interventions during freshman year of college to decrease substance use and promote timely graduation.     

Stability and sequence of center-based and family childcare: Links with low-income children's school readiness

The school readiness of a large sample (n = 2682) of ethnically and linguistically diverse, low-income children was examined as a function of whether children remained in family childcare (FCC) or center-based care (CBC) throughout their three and four-year-old preschool years, or whether they switched to the other type of childcare or to a public school pre-K program at age four. Children's pre-academic development (cognition, fine motor, and language) was assessed with the Learning Accomplishment Profile — Diagnostic (LAP-D), and teachers and parents rated children's social skills and behavior concerns with the Devereux Early Childhood Assessment (DECA) at three time points over two years. All children, regardless of childcare sequence, demonstrated some gains in school readiness. However, children receiving stable CBC over the two years made moderate gains in pre-academic skills and teacher-reported social skills. Children in stable FCC exhibited some gains in fine motor, language, and teacher reported-social skills but lost ground relative to national norms in cognitive skills. Children who switched between CBC and FCC did not show as much pre-academic growth (with those who switched to FCC gaining the least); however, children who switched from CBC to FCC did demonstrate strong teacher-reported social skills. Children who switched to public school pre-K programs at age four showed the strongest school readiness and were the only group to score above national averages in language and cognition.     

Doing It All? Mothers' College Enrollment,Time Use,and Affective Well‐being

The rising share of women in college with dependent children and growing emphasis on two‐generation policies for reducing socioeconomic inequality have galvanized research aimed at determining whether mothers' increased education can improve their and their children's well‐being. Yet as part of this effort, scholars have overlooked signs that mothers' college enrollment may not be unequivocally good for families. This research brief aims to bring greater attention to this side of the story. The authors analyze time diary (2003–2015) and well‐being data (2010, 2011, 2013) from the American Time Use Survey. The authors find that mothers in college experience a time squeeze that limits their time in caregiving, self‐care, and work, on one hand, and school‐related activities, on the other. This time squeeze may explain why mothers enrolled in college (compared with mothers who were not in school) also reported less happiness and more fatigue during activities with their children.