Enrollment in a Savings Program for Lower-Income Households

Background and Purpose: This study is part of a larger quasi-experimental research project conducted between 2004-05 in the US called the Impact Assessment Baseline Survey by Saving for Education, Entrepreneurship, and Downpayment (SEED) – a national policy, practice, and research initiative. The setting of the survey was in a large community action agency that serves pre-school families in Oakland and Livingston counties in Michigan. Parents were given a chance to open accounts for their pre-school children that could later be used for pose secondary education. When parents decided to open accounts, an initial $800 through the Ford Foundation was deposited into their accounts. A progressive incentive included an additional $200 deposit from the State of Michigan for families with household incomes less than $80,000 a year. For four years, SEED created 1:1 matched incentives for every dollar saved by parents up to a maximum of $1,200, meaning that parents could possibly have earned at least $3,400 over the four years. After these four years which ended in December 2008, parents are free to continue to save on their own in these initiated accounts. The study sought to answer the following questions: 1) what individual and household characteristics are associated with a parental decision to join a children's college savings account program? and 2) controlling for individual and household characteristics, what is the relationship between social services and the parental decision to join a children's college savings account program

Methods: Using computer-assisted telephone interviews (CATI), a total of N=790 study participants were interviewed for the original baseline study. Of these, 48.2% (n=381) were assigned to the treatment condition and were offered the opportunity to open SEED accounts for their pre-school children. Parents in the treatment group received program social services aimed at helping them join SEED and open accounts. The analyses for this study included only the sub-group of n=381 participants who had the opportunity to join SEED by opening college savings accounts. Data for social services was retrieved from individual client files at the agency. Logistic regression was used to determine what factors were associated with parental decision to open or not open accounts.

Results: Findings are consistent with previous results and showed that only parent's level of education, SEED staff person assigned to the parents, and in-person meetings between SEED Staff and parents were significantly associated with parental decision to open accounts. The findings lend some support to the institutional perspective on saving which states that external factors including asset building policies and programs, rather than individual and household characteristics, may be more responsible for the gaps in financial asset holding in the US. Social workers interested in addressing asset gaps should therefore identify policies and programs, as well as services that are more inclusive of lower-income households. Social workers can increase the inclusion of vulnerable families in asset building programs by using their professional helping, communication, advocacy, and community practice skills.