School Savings and College Attendance Among Low- and High-Income Young Adults

Background: Since college attendance is an important precursor to educational advancement and ultimately better paying jobs, understanding the factors that promote attendance is crucial. Researchers have identified a number of factors including social capital, cultural capital, economic capital, and human capital, as being key predictors of college attendance. However, little is known about the relative impact of these factors on students from low-income families. Furthermore, assets are often excluded as a key variable in operationalizing economic capital. This study asks, “Are low-income young adults who had school savings as adolescents more likely to attend college than low-income young adults who did not have school savings as adolescents when controlling for economic, cultural, social, and human capital?”

Methods: This study uses longitudinal data from the Panel Study of Income Dynamics (PSID) and its supplements, the Child Development Supplement (CDS) and the Transition into Adulthood supplement (TA). The three data sets are linked using PSID, CDS, and TA map files containing family and personal ID numbers. The linked data sets provide a rich opportunity for analyses in which data collected at an earlier point in time (2002 or earlier) can be used to predict outcomes at a later point in time (2007) and stable background characteristics can be used as covariates. Multivariate analyses are used to examine the independent effects of school savings on college expectations and college attendance.

Results: Findings suggest that low-income young adults with school savings as adolescents are nearly two and half times more likely to attend college than low-income young adults with no school savings as adolescents. In contrast, school savings is not a significant predictor of whether high-income young adults attend college. In the case of low-income adolescent college expectations, parent savings for their adolescent is significant but not adolescent school savings. Conversely, high-income adolescents with school savings are nearly seven times more likely to expect to graduate from college than high-income adolescents with no school savings of their own.

Conclusions: Although a growing amount of research is being done on the asset/college relationship, this research has not specifically examined this relationship among a sample of low-income young adults. Findings from this study suggest that promoting programs, such as Child Development Accounts (CDAs) that help low-income adolescents and their families save for school, may be an important way to increase college attendance among this group. Moreover, findings suggest that parent savings for college may be more important than adolescent school savings for building positive college expectations among low-income adolescents. It may be that parent savings serve as an outward signal to the adolescent that their parent expects them to attend college. Overall, findings suggest that programs that build both adolescent savings and parent savings may be important in helping to increase college attendance rates among low-income adolescents.