Closing the Educational Gap for Hispanic Immigrants: The Role of School Savings

Purpose: An increasing number of immigrants have come to the U.S. in pursuit of a higher income and better education for their children, with the goal being to improve their living standards. In particular, Hispanics are the fastest growing immigrant population. The rapidly growing number of young Hispanic immigrants will continue to greatly influence the labor force and demand for education in the U.S. In spite of their high educational aspirations, Hispanic immigrant youth have the lowest rates of both college attendance and graduation among major racial/ethnic groups in the U.S. Since lack of financial resources is indicated as one of the most significant factors, studies have examined the impact of income on educational outcomes. However, the effect of school savings on Hispanic immigrant youth’s educational attainment has yet to be fully explored. The main purpose of this paper is to identify the role of parents’ school savings for their children on increasing college attendance and graduation among Hispanic immigrant youth. Since Hispanic immigrants as a group vary greatly depending on their country of origin, this study also examines the effect of savings on educational attainment for Hispanic subgroups, Cuban, Mexican, and other Hispanic immigrant youth, separately. We also test the indirect pathway linking school savings to educational attainment through college expectations. This is the first study to examine the mediating effect of Hispanic immigrant youth’s college expectations between school savings and education.

Methods: We analyze data from the Children of Immigrants Longitudinal Study. The sample in this study is restricted to Hispanic immigrant youth in the U.S. based on the respondent’s nation of origin (N=881; Cuban= 295, Mexican= 230, and other Hispanics = 356). Both hierarchical linear regression and multinomial logistic regression are estimated. Educational attainment, dependent variable, is measured by total years of completed education and college attendance as well as graduation.

Results: Preliminary findings show that parents’ school savings is a significantly positive predictor of Hispanic immigrant youth’s total years of education. In terms of Hispanic national subgroups, school savings are positively associated with educational attainment for the Cuban and Mexican youth, separately. In addition, Hispanic immigrant youth whose parents have school savings are almost two times more likely to graduate college than otherwise similar youth without school savings. Hispanic immigrant youth’s college expectations have a strong influence on educational attainment after controlling all other demographic and socioeconomic factors. However, college expectations do not mediate the association between school savings and educational attainment.

Implications: The findings suggest that more responsible school savings policies may be needed to help economically disadvantaged Hispanic immigrant youth reach their desired educational goals. The current tax-based college savings that is more likely to benefit middle- and high-income than low-income households should be improved. Proposed asset-building policies such as Child Development Accounts can help parents and youth accumulate savings–especially savings for higher education– may be effective strategies for helping Hispanic immigrants achieve higher education and, ultimately, a better future.