Individual Development Account Trajectories Among Native Hawaiian Education Savers
Native Hawaiians and Pacific Islanders (NHPI’s) have disproportionately low educational outcomes. In 2010, 15% of adult Native Hawaiians had a bachelor’s degree, compared to 20% of the total US population. Many scholars attribute the current education gap to systemic factors, such as historical as well as current, economic, political and educational policies. Many interventions attempt to rectify this education gap. Individual Development Account (IDA) programs aim to increase postsecondary education (among other objectives) via matched savings subsidies. Participants save into an account that can be matched at a rate ranging from 1:1 to 3:1 to be applied for postsecondary education costs. Using longitudinal data from an IDA program, this paper examined the following questions specifically for education savers: (1) What demographic and economic factors are associated with IDA program enrollment (participation) versus non-enrollment? And, (2) What demographic and economic factors are associated with IDA graduation (matched withdrawal)?
Data were collected between 1999 and 2005 from individuals who applied to an IDA program in Hawaii. Data for this study were filtered to include only education savers (N = 225). A series of logistic regression models focused on two outcome variables. First, IDA enrollment was the process of opening a savings account in the program (87 individuals applied but never opened an account). Second, IDA graduationwas the process of making a matched withdrawal from the account towards postsecondary education. Independent variables included demographic factors (age, gender, marital status, etc.) and economic well-being variables (income, financial and non-financial assets). A net worth variable was constructed using the inverse hyperbolic sin transformation. Splines with knots were used to explore non-linearity and threshold values of net worth (low < $2,000; medium -$1,999 to $2,000; high > $2,000).
The sample of education savers is first described. Next, multivariate logistic regression models predicted IDA enrollment. Among applicants, full-time employment compared to unemployed (OR = 5.57) and historical receipt of TANF (welfare) (OR = .48) were associated with program enrollment (p < .05). Building on the base model, asset and net worth variables were added but were not statistically significantly related to enrollment. Logistic regression models were then used to predict graduation. Demographic variables were not statistically significantly related to graduation, but economic variables were. Checking account ownership and middle net worth increased likelihood of graduation, OR’s = 3.51 and 2.94, respectively (p < .05). Low net worth strongly reduced the likelihood of graduation (OR = .36; p< .001).
Conclusions and Implications:
This paper is the first systematic analysis of IDA trajectory through enrollment and graduation among Indigenous participants who saved for education. Supporting previous research findings, IDAs may have selective benefits to the low-income population as unemployed and previous welfare receipt strongly reduced likelihood of enrollment. To improve postsecondary outcomes, attention must be provided to IDA participants with low net worth as they are at risk to not graduate.